(navigation image)
Home American Libraries | Canadian Libraries | Universal Library | Community Texts | Project Gutenberg | Children's Library | Biodiversity Heritage Library | Additional Collections
Search: Advanced Search
Anonymous User (login or join us)
Upload
See other formats

Full text of "Valley authorities"

NO. 438 IN THE SERIES "NATIONAL ECONOMIC PROBLEMS 



VALLEY 
AUTHORITIES 

By 
RAYMOND MOLEY 




(17l9v 

a.2 



PUBLISHED AND DISTRIBUTED BY THE 

AMERICAN ENTERPRISE ASSOCIATION, Inc. 

4 EAST 41ST STREET . • NEW YORK 17, N. Y. 

Trice 50 Cents 



UNIVERSITY 
OF FLORIDA 
LIBRARIES 




VALLEY 
AUTHORITIES 

by Raymond Mpley 

Contributing Editor, Newsweek Magazine. 
Professor of Public Law, Columbia University. 



NO. 438 IN THE SERIES "NATIONAL ECONOMIC PROBLEMS" 
PUBLISHED AND DISTRIBUTED BY THE 

American Enterprise Association, Inc. 

4 EAST 41ST STREET • NEW YORK 17, N. Y. 



333.^13 
C.SL 



Firsf Printing 
September, 1950 



Copyright 1950 by the American Enterprise Association, Inc. 

4 East 41st Street, New York 17, N. Y. All rights reserved. 

Manufactured in the United States of America by the 

Sanders Printing Corporation, New York 



TABLE OF CONTENTS 



PAGE 



i. The Concept of Regional Authorities 7-11 

ii. The Tennessee Valley Authority 12-22 

origin and initiation 12-14 

growth, cost and economic results 14-19 

political and social intangibles 19-22 

hi. The Columbia Valley Administration 23-34 

tennessee and columbia valleys contrasted 23-25 

the plan for a cva 26-29 

the alleged case for necessity 30-31 

the northwest has other plans 31-32 

general criticisms of the cva plan 32-34 

Concentration of Power 32 

Lack of Responsibility to the Region 32-33 

Inadequate Responsibility to Congress 33 

Invasion of State and Local Governments 33-34 

Destruction of Private Enterprise 34 

Control by Allocation 34 

iv. The Missouri Valley Authority 35-42 

THE UNIQUE FEATURES OF THE REGION 35-37 

PRESENT PLANS FOR THE MISSOURI VALLEY 37-38 

THE MISSOURI VALLEY AUTHORITY PROPOSAL 38-42 

GENERAL COMMENT ON THE MVA PROPOSAL 42 

v. The United Authorities of America 43-46 

vi. Dangers and Defects of Authority Plans 47-65 

A PHILOSOPHY OF FEUDALISM 47-48 

MEAGER PROOF OF NEED 48-49 



PAGE 

TVA AN INCOMPLETE EXPERIMENT 49 

GREAT DIFFERENCES IN REGIONS 49-50 

WATERSHED REGIONALISM OUTDATED 50-51 

INADEQUATE RESPONSIBILITY TO CONGRESS AND THE 

PRESIDENT 51-53 

FEDERAL FUNCTIONALISM SACRIFICED 53 

AUTOCRACY OF AUTHORITIES 53-55 

THE INVASION OF STATE AND LOCAL GOVERNMENT 55-57 

REVISION OF ESTABLISHED WATER LAW 57-58 

A REVOLUTION IN LAND OWNERSHIP 58-59 

THE DESTRUCTION OF PRIVATE ENTERPRISE 59-60 

DISTORTION OF FINANCIAL ACCOUNTING 60-62 

EMPLOYMENT PRACTICES 62 

GREAT COSTS 62-63 

THE NARCOTIC OF PATERNALISM 63-64 

PROPAGANDA AT PUBLIC EXPENSE 64-65 

DANGERS TO ALL LIBERTIES 65 

vii. Coordination Without Autocracy 66-76 

STATE PRESERVATION AND PARTICIPATION 66-67 

HOOVER TASK FORCE SPECIFICATIONS 67-68 

HOOVER TASK FORCE RECOMMENDATIONS 68 

HOOVER COMMISSION RECOMMENDATIONS 69-70 

SURVEY BY COUNCIL OF STATE GOVERNMENTS 70 

THE WATKINS WATER AND POWER USERS' ASSOCIATION 

CONCEPT 70-71 

PROPOSED COLUMBIA RIVER COMPACT 71 

AN INTERSTATE-FEDERAL COMPACT PLAN 71-76 

Essential Requirements 71-72 

Essential Elements of Policy 72-76 



PUBLICATION POLICY 

NATIONAL ECONOMIC PROBLEMS SERIES 

JLhe purpose of the American Enterprise Associa- 
tion is to inquire into and appraise current economic 
and social questions as they bear on public policy, 
and to disseminate its findings, so as to further pub- 
lic understanding of such matters. As an educational 
and nonpartisan body, the Association endeavors to 
be completely impartial and objective in its work. 
The Association takes no stand either in favor of or 
against any proposed legislative measures. 

This study is published in the Association's 

NATIONAL ECONOMIC PROBLEMS SERIES. Studies in this 

series are intended to place in perspective, and to 
analyze, matters of major importance that either are 
the subject of pending legislation or seem likely to 
become so in the near future. The Advisory Board 
selects the subjects of the publications in this series. 
In the study of the subjects selected, the Board seeks 
to utilize the services of the most competent avail- 
able experts, without regard to the political or eco- 
nomic views held by them. 

Many of the subjects in this series, by their nature, 
permit of different approaches and viewpoints. In 
particular instances and as warranted by circum- 
stances, the Board contemplates giving expression to 
different views by publishing more than one study 
dealing with the same subject. 

The Association and the Advisory Board exercise 
the utmost care to assure thorough and unbiased 
analysis of the subject matter but assume no respon- 
sibility for opinions expressed by authors. 



Digitized by the Internet Archive 
in 2013 



http://archive.org/details/valleyauthoritieOOmole 



VALLEY AUTHORITIES 

I 



THE CONCEPT 
OF REGIONAL AUTHORITIES 



H, 



ad the framers of our Constitution fully conceived of the 
importance of regionalism, the great war between the states might 
have been avoided. For ever since the national domain of 1789 
began to spread over the continent, regional areas presented prob- 
lems too large for the states and inappropriate for Federal action. 

In an area of such imperial dimensions, nature, human enter- 
prise, social conditions, and culture itself created intermediate 
areas with conditions peculiar to themselves and common to the 
states therein enclosed. 

The restricted mechanics of our constitutional system faltered 
in meeting these regional problems. Debatable zones of authority 
were an invitation to political ambition, improvisation, and local 
jealousy. Legislative, Executive and Judicial standards, imper- 
fectly created, became a deep concern to sincere statesmanship. 
Thence was derived the famous twilight zone of constitutional 
authority, over which Theodore Roosevelt boldly and with 
altogether too little foresight sought to raise the flag of Federal 
jurisdiction in the name of "the New Nationalism." 

[7] 



Extension of Federal jurisdiction alone is neither a wise nor safe 
means of meeting these regional problems. The vast size of the 
United States precludes sound legislation and administration 
emanating from a national capital which is unfortunately located 
on the periphery of the nation. In the exercise of Federal authority, 
there is, moreover, great danger to local minorities from the tyranny 
of a national majority of the national Legislative branch and ulti- 
mately of the national Executive. 

State lines were drawn for the most part with little regard for 
homogeneous economic, political, and social interests. For nearly a 
century, admission of states to the Union was a matter of political 
expediency or of purposive advantage to the party in power. Some 
states were admitted that never should have been created, except 
as parts of a larger unit. The result is a patchwork of theoretical 
equals, actually unequal. 

Regionalism, thus denied constitutional form, nevertheless 
claimed its reality in hundreds of governmental and private struc- 
tures. Federal agencies have created scores of administrative re- 
gions. Great business enterprises find regional groupings of states 
necessary for their purposes. And slowly the states themselves have 
found mutual interests drawing them together into regional groups. 

It is into this governmental void that the Federal government 
since 1933 has been endeavoring to thrust the device of regional 
authorities based upon specific watersheds. In subsequent pages 
I shall discuss in some detail the inadequacy of this concept of 
regional divisions. Here I merely note that the highly debatable 
policy that is the subject of this study seems to have originated in 
1932 or 1933, when Senator George Norris gave to the immensely 
ingestive mind of Franklin D. Roosevelt the idea of a Tennessee 
Valley project. In the emergent moment after the President's in- 
auguration, the word became flesh and cement and steel and 
bookkeeping. 

Feeling that in the TVA there had been produced a new, notable 
piece of government machinery, Roosevelt and others almost im- 
mediately drew the conclusion that the pattern could be widely 

[8} 



extended. Roosevelt said at the time: "If we are successful here, 
we can march on, step by step, in a like development of other great 
natural territorial units within our border s." 

Without waiting, however, for the complete returns from the 
TVA to come in and be assayed, plans for its application in other 
watersheds took form. People were enlisted who produced new, 
colorful plans for a new, regional nation, and in 1937 there went 
to Congress a message recommending a series of authorities for 
seven watershed regions. 

The affinity of President Roosevelt with this idea is easy to ex- 
plain. He had, as Governor of New York, inherited from his prede- 
cessor, Alfred E. Smith, the concept of a St. Lawrence project. The 
actual word "authority" came from the Port of New York Authority, 
which, incidentally, is based upon a state compact and is not a 
Federal project. 

It must be added that the authorities idea offered great oppor- 
tunities for political exploitation. It was spectacular. It offered the 
promise of serving many people. Its expenditures could be used to 
provide employment and stimulate the economy. It produced the 
inevitable antagonist, the private power companies, which tradi- 
tionally have been the favorite targets for political attack. 

Moreover, it could be argued that the idea meant the decen- 
tralization of Federal power. 

It could be argued that it offered a most seductive elevation of 
living standards to the people at lower costs, because it meant the 
exploitation of the seemingly free, inexhaustible resources of 
nature. 

Meanwhile, Congress and the Executive have been busy with 
an incredible process of water and land development through the 
established agencies of the Federal government— the Bureau of 
Reclamation, the Army Corp of Engineers, and others. A vast 
outlay of public funds has been involved. Many specific plans of 
development and operation have been created. And the TVA has 
grown to very large proportions. 

[9} 



The war temporarily pushed aside the idea of more regional 
authorities, although bills to that end were Congressional peren- 
nials. Since 1945 the Federal Administration, under President Tru- 
man's encouragement and spearheaded by officials of the Interior 
Department and a number of Democratic members of Congress, 
has concentrated on at least two adaptations of the idea— one for 
the Columbia Valley, another for the Missouri. As recently as May, 
1950, President Truman on a western tour vigorously advocated 
new authorities, notably the Columbia Valley Administration. 

Vigorous opposition, awakening to the vast implications of the 
concept, has developed in the Columbia and Missouri regions. 
Governors of the states in those watersheds are virtually unanimous 
in opposition. Issues of fundamental importance have arisen, such 
as the legal rights of the states in their water and land resources, 
the danger to state and local institutions and to private property 
and the role of privately financed undertakings in the development 
of these resources. Other issues are concerned with the relative 
value of specialized Federal agencies as against regional agencies 
concentrating all developmental activities, and possible alternative 
approaches to the desirable end of coordinate interstate develop- 
ment. 

To the extent that the Federal government engages in water 
resource development on a watershed basis there are at least three 
possible approaches: the authority approach, the inter-agency 
committee approach, and the interstate compact approach. 

We have only the experience of the TVA to guide us on the first 
of these approaches. There is abundant experience in the second. 
And the third, which seems to offer the best solution of all, also has 
successful experience to commend it. 

In the following discussion of the authority concept, I am noting 
only briefly the many financial, engineering, agricultural and other 
technical problems common to all three approaches. My concern 
is with a number of fundamental principles of government, of law, 
and of basic human rights and liberties. For the authority proposal 
is a challenge to many traditional American principles. 

[10] 



It is in essence a revival of the principle of feudalism in modern 
garb. Under it, the individual yields a measure of personal liberty 
and local self-government, in return for the maintenance of a stand- 
ard of living by an authority over which he has little or no political 
control. In this monograph, after an examination of thousands of 
pages of reports, Congressional hearings and other material, I shall 
attempt to make this central point clear. 

The immediate objective of the advocates of the authority con- 
cept is the creation of a Columbia Valley Administration. The 
decision on that proposal will be the turning point in government 
policy for years to come. Hence, in what follows I have given the 
CVA major attention. For it, together with the Missouri Valley 
plan, raises almost every issue involved in the whole concept of 
watershed authorities. 






[in 



II 



THE TENNESSEE VALLEY AUTHORITY 



ORIGIN AND INITIATION 

The notion of some public project on the Tennessee River was not 
new when the TVA was first proposed. The suggestion of a hydro- 
electric plant at Muscle Shoals first appeared in 1898, but it was 
not until the first World War that anything was done. Then the 
dam was created to provide nitrogen for war use. The war ended 
before the dam was finished. It remained a possession of the Federal 
government, and from 1921 until 1933 a fierce battle raged over the 
use to which it was to be put. Senator Norris on the one side fought 
to have the dam used by the government for the production of 
electric power and fertilizer. Private power companies sought to 
buy or lease the property. Government ownership and operation 
bills were vetoed by Presidents Coolidge and Hoover. 

With the election of Roosevelt, whom Norris ardently supported, 
the old Senator's dream came true with vast embellishments which 
his earlier dream had apparently neglected. For in the meeting of 
the minds of Roosevelt and Norris a gigantic concept took form. 
This was announced by Roosevelt in the following terms : 

"It is clear that the Muscle Shoals development is but a small part 
of the potential usefulness of the entire Tennessee River. Such 
use, if envisioned in its entirety, transcends mere power develop- 
ment; it enters the wide fields of flood control, soil erosion, affor- 
estation, elimination from agricultural use of marginal lands, and 

[12] 



distribution and diversification of industry. In short, this power 
development of war days leads logically to national planning for 
a complete river watershed involving many states and the future 
lives and welfare of millions. It touches and gives life to all forms 
of human concerns." 

The complexity of Roosevelt's approach to a major policy deci- 
sion is well shown by what had happened before this announce- 
ment. In his campaign for the Presidency the year before, he had 
proposed in a very mild form in a speech at Portland, Oregon, the 
idea of using government hydro-electric power developments at 
Hoover Dam, at Muscle Shoals, on the Columbia and on the St. 
Lawrence as "yardsticks"— that is, as means for the accurate and 
fair regulation of private power rates everywhere. The broader 
ideas involved in TVA had either not occurred to him or he was 
keeping them to himself. I participated in the preparation of the 
Portland speech, and at no time did he suggest to those who were 
advising him the concept of an "authority." After the TVA bill was 
introduced in Congress, someone approached him with a sugges- 
tion of amendment. His reply was, "Speak to Senator Norris. It's 
his baby." 

This grand design, however nobly conceived, could hardly have 
been sustained either by a reasonably obedient Congress or by the 
Supreme Court of that time. Hence, the early requests for ap- 
propriations were, in the light of what happened later, relatively 
modest. And the professed purposes in the bill submitted to Con- 
gress were hardly descriptive of the immense authority which 
eventually took form. To suggest that there be lavished vast 
treasure on a relatively small section of the nation at the expense 
of all would have aroused an opposition of other sections that would 
have quickly manifested itself in Congress. And such a stupendous 
piece of paternalism could never have been squeezed through the 
Constitution, despite the fact that the general welfare clause was 
already opening a crack which was later to be a veritable breach. 

The act cited as authority for the project the interstate commerce 
and national defense clauses of the Constitution. The development 

[13] 



of electric power was not mentioned in the preamble. The pro- 
fessed purposes were: 

"To improve the navigability and to provide for the flood control 
of the Tennessee River; to provide for reforestation and the proper 
use of marginal lands in the Tennessee Valley; to provide for the 
agricultural and industrial development of said valley; to provide 
for the national defense by the creation of a corporation for the 
operation of Government properties at and near Muscle Shoals 
in the State of Alabama and for other purposes." 

Despite this constitutional hedge, the broader purposes became 
apparent from the outset. They were revealed in the qualifications 
and interests of the first members of the Governing Board. Arthur 
E. Morgan was selected as Chairman. He was a hydraulic engineer 
of note and an advocate of multi-purpose planning. Harcourt 
Morgan was a specialist in agriculture. And David E. Lilienthal 
was a student of public power development and a social philosopher 
whose ideas ranged far into the realm of government expansion. 
The paramount objective of electric power was underlined later 
when Lilienthal supplanted Arthur E. Morgan as Chairman. 

Moreover, when sites were chosen for new dams, the multi- 
purpose ones— which permitted the generation of electric power- 
were chosen, despite their vastly greater cost. 



GROWTH, COST AND ECONOMIC RESULTS 

The estimated investment in fixed assets in 1934 was (less de- 
preciation) $12 million. In 1938, the figure crossed $200 million. 
It is now reckoned at $800 million. 

The total reckoning of cost to the government has varied accord- 
ing to estimates of interest which should have been paid by TVA. 
However, the total cost, including interest and taxes, has generally 
been put just below $1 billion. 

The major construction program outlined in 1936 was nearing 
completion in 1940. Then the needs of wartime production offered 
a means of further expansion. A new program of dam construction 



[14] 



was rushed through. Moreover, the purchase of the Tennessee 
Electric Power Company had brought in more properties in 1939. 
By 1948, the TVA was operating 27 dams. The original area of the 
authority had been doubled. According to some authorities, it now 
covers 80,000 square miles. In this are included such areas as are 
covered by the fertilizer program where TVA has a limited interest 
and control. 

From the outset, a sea of controversy has beaten over the ac- 
counting methods of the TVA. In 1938 this resulted in a Congres- 
sional investigation, and a new accounting system was established 
and several amendments to the original act were passed. Contro- 
versy, however, has not ceased, although a new slant in the Supreme 
Court and the exigencies of the war have removed the screen from 
electric power as the major purpose of the whole project and all 
the paternalistic activities which now pervade the area. 

Leaving legal indirection aside, the TVA is now doing just about 
what its parents, President Roosevelt and Senator Norris, intended 
it to do. The propriety or legality need not be argued here. It is, 
however, pertinent to select a few items of cost from the mass of 
controversial data that has appeared and to consider briefly what 
the region and the nation have got from the public money 
expended. 

The TVA pays one percent interest on $56 million borrowed 
from the Treasury. But the Treasury pays considerably more in- 
terest for this money. In comparison, it should be noted that the 
Bonneville Power Administration, a vastly more business-like affair, 
pays 2.5 percent on its investment. 

On the vast investment of government funds, very little interest 
is being paid by the authority, although the government itself pays 
interest on its debt. So far as amortization is concerned, practically 
nothing is being set aside or returned. Under the law, the TVA 
should pay to the Treasury any excess over expenditures, but so 
far, only $26 million has been paid. Beginning with the fiscal year 
ended June 30, 1948, TVA is required by law to pay an amount in 

[15] 



addition to its bonded indebtedness sufficient to bring the total up 
to $87 million in ten years. This is supposed to continue until $348 
million has been paid. In two years however— years of great in- 
flation and apparent prosperity— only $11 million has been paid. 
This is a meager assurance of ultimate repayment. 

A rough estimate of the present situation and prospect is (with- 
out seeking to strain a figure of speech ) that this great expenditure 
is water over the dam. It is gone. And for value received we must 
search about among the intangibles of so-called "social values/' 
war costs, general national prosperity, and health and happiness 
of people. 

But it is important, as we face a demand for the extension of this 
idea over the nation, to consider the problems involved in arriving 
at a sound policy under which such government enterprises may 
be judged in terms of concrete returns, the possibility of better 
returns through private competitive enterprise, the value of com- 
bining many different purposes in the same project, and the dan- 
gers to our political institutions in such great economic ventures 
and experiments. 

In the first place, the methods of allocating costs for the various 
purposes of the TVA have been subject to serious question. The 
Hoover Commission pointed out that sharp divergencies are pres- 
ent, even among the various government agencies dealing with 
multi-purpose projects. The Hoover Task Force on Water Re- 
sources Projects, headed by Col. A. B. Roberts, concluded that the 
controversy over allocation remains unsolved. 

The reason for this is that costs for some purposes such as flood 
control and navigation are not now treated as reimbursable, while 
costs of electric power and irrigation should be reimbursable. 
Hence, the motive of a government agency is to put the highest 
possible proportion of cost on non-reimbursables. No estimate of 
the efficiency or feasibility of government in the power business 
is possible until this knot can be untied. 

[16] 



Although the Federal Power Commission stated in a report in 
1949 that the allocation of costs of multiple-use facilities as used 
by the Tennessee Valley Authority is reasonable and should be 
accepted for the purposes of the TVA Act, the report, as pointed 
out to the Comptroller General by the General Accounting Office, 
is qualified in two important respects, as follows: 

"1. The Chairman of the Commission has commented that: T 
think it should be emphasized, however, that in testing the ap- 
plicability of that theory it has been necessary for the Commission 
to accept without independent appraisal the estimates of costs 
and benefits developed by other agencies, with the result that the 
final judgments expressed are less conclusive than might other- 
wise be the case.' 

2. In addition, the allocation to navigation, according to the Chair- 
man of the Federal Power Commission, is based upon benefits to 
be obtained from river traffic expected to materialize by about 
1960 in an amount approximating twice the present tonnage. 
Whether such expectations are justified cannot, of course, be de- 
termined at this time." 

It is sufficient to add that the TVA's electric power activities have 
been and will undoubtedly continue to be a heavily losing venture 
and that in one way or another taxpayers over the nation must bear 
the burden of subsidizing a small part of the nation's users of 
electricity. 

A judgment as to the real value of the accomplishments of the 
TVA in fields other than electric power is equally difficult to make. 
One of those fields was to be the improvement of navigation. Pro- 
ponents of the navigation angle of the project point to the advan- 
tage gained by this expenditure in providing a competitor for the 
railroads and thus pressing down railroad rates. This is not only a 
costly way to reduce railroad rates, but a very unfair one. It rep- 
resents a direct use of taxpayers' money to decrease the income 
and reduce the efficiency of privately owned railroads. 

But despite the professed vast expenditure for navigation, there 
has been no commensurate increase in river-borne commerce. In 
1922, tonnage on the Tennessee River was one million tons. In 
1930, it was 2.5 million tons. In 1948, after the expenditure of huge 

[17] 



TVA funds, it was 3.2 million tons. Thus, the rate of increase was 
larger before the "improvements" than after. 

On the basis of the amount spent for the "improvement" of 
navigation the cost per ton mile is about 2.5 cents. The average 
railway rate is 1.1 cents. 

The cost of flood control has been very great. The Army En- 
gineers have estimated that a flood covering 666 thousand acres 
could be expected once in 500 years. As a protection against this 
and in the name of flood control, TVA acquired one million acres 
of land. It flooded 463 thousand acres and held 128 thousand acres 
in reserve. The Army Engineers have estimated annual damage 
due to floods at $1.8 million. Actual expenses charged to flood 
control in the single year 1949 were $2.3 million. 

The effect of these flood controls on agriculture is a good illus- 
tration of the conflict of purposes in such a multi-purpose project. 
The land flooded and held in reserve was the best and most pro- 
ductive in the valley. To eliminate an annual loss of $1.8 million 
on this land the valley has suffered an annual loss of production 
estimated at $27 million. This is a curious way to increase wealth 
and "to provide for reforestation and the proper use of marginal 
land." The people who lived on this land were moved up the hills 
onto less productive land. There, presumably, they needed more 
help to make ends meet. Their land had been paid for, of course, 
and with the money they were able to bid up the prices of the 
poorer lands to which they went. 

The economic effects of this vast moving of a population was felt 
heavily by the local governments. In some counties local govern- 
ment was almost wholly annihilated because a very large part of 
the farm lands which provided tax sources disappeared under the 
waters of the lake. 

Although Muscle Shoals was hailed by Senator Norris as a re- 
markable means of producing fertilizer for farmers, in this respect 
the contribution of TVA has been costly and not extensive. In 
1949, 80 percent of the fertilizer produced went to states outside 

[18] 



the valley. The consumption of fertilizer in the seven TVA states 
has increased from two million tons in 1933 to 5.5 million in 1947. In 
the same period, the annual consumption in the whole United 
States increased from five million tons to 15 million tons. 

Power production, however, has greatly increased from 333 mil- 
lion kilowatt hours in the 1934-36 period to 15.7 billion kilowatt 
hours in 1949. At the same time, the total United States production 
rose from 97 billion kilowatt hours to 291 billion kilowatt hours. 

These are the tangible, material results and shortcomings of 
the TVA. 



POLITICAL AND SOCIAL INTANGIBLES 

The answer of the tva to its critics is that its value to the nation 
cannot be judged in material terms. The intangibles are cited, such 
as a higher living standard for the people in the valley, the stimula- 
tion of industrialization in what was once a backward area, and 
the total addition to national wealth resulting from lifting this area 
into line with other parts of the country. These are matters that 
have no fixed monetary values or are too complex for calculation. 

We are asked to consider that the TVA is a great laboratory ex- 
periment in government enterprise. An experiment is something 
that is done at a certain cost to guide us in future expenditures. 
If by this, we may draw the conclusion that our billion dollars, or 
a part thereof, should teach us not to follow some of the methods 
that have been followed, we shall be accused of jesting about a very 
serious matter. And if we suggest that many of the wastes might 
have been avoided by more foresight, we are reminded that the 
project encountered heavy going against "selfish private interests 
and blind attachment to the past." 

If we regard the TVA as a means of learning how to develop 
other river valleys, we shall have to suggest that regions differ 
in such fundamental respects that a doubtfully successful ex- 
periment in the Tennessee Valley hardly justifies a serious effort 

[19) 






to implant the same idea elsewhere. As an experiment it has its 
special limitations, and one can only wish that it might have been 
tried on a smaller scale, with less indirection and at a lower cost. 

The project was in reality an effort to establish in a limited area 
an authority under the general supervision of Congress and the 
Executive, but with little or no control by the specific states in- 
volved. This, it is claimed by Mr. Lilienthal, is to provide "an 
effective combination of the advantages of the decentralized 
administration of centralized authority." This is a bit confusing, 
but he probably means that to avoid the projection of Federal 
power from Washington into local affairs, the Congress sets up a 
smaller centralized authority in the region and measurably lets 
that sub-authority run things without interference. But in reality, 
it means that the TVA, headed by people who are fairly fixed in 
tenure, is measurably immune from Congressional control and com- 
pletely immune from local control. But what if at some time the 
TVA bosses should not be so devoted to the people's interests as 
were Mr. Lilienthal and his colleagues? Their independence would 
then be pernicious and dangerous. 

Again, Mr. Lilienthal abhors politics, presumably meaning the 
type of patronage politics attributed by him to his old enemy, 
Senator McKellar. He says: 

"TVA, if it were politically managed, could become a curse to this 
valley. Just what would it mean if politics had been injected into 
TVA's selection of personnel, or into detailed administration of 
funds by which the job is carried out? It would mean that the 
thousands of miles of transmission lines built by TVA's forces 
might have been located not for economic and engineering reasons, 
but upon a political basis. A city that votes 'right,' a county that 
delivers the 'right' number of votes for a particular organization or 
candidate, an industry that 'comes through,' could be rewarded by 
advantages in the location of transmission lines, though such a 
location was not justified by the business facts. A city and its 
industries that do not vote 'right' might find that its electric sub- 
stations were not adequately maintained, that service was poor, 
that its industrial growth had stopped." 

L 

[20] 



His point is well made. But it suggests an inference that Mr. 
Lilienthal has not drawn. It may well be, as has been shown over 
and over, that when the novelty of such new government enter- 
prises has grown dim, and able and non-political pioneers retire 
from the scene, politically-minded Presidents will appoint hack 
politicians and bureaucrats to these good jobs. The concentration 
of power intended for the good of mankind may well be used for 
the good of the party. That is why in establishing government it 
must always be assumed that it may some time be controlled by 
imperfect men. That is why our basic traditions point up the 
necessity of limiting the power of government. 

We are confronted here with the eternal problem of human 
freedom. From Plato to Lilienthal, there have been good men who 
believed that power entrusted to them would be safe. But from 
Aristotle to Jefferson, we have been told that the protection of 
people from the tyranny of government must be built in the light 
of human nature and experience. It must be so constructed that 
even the good and benign ruler will be well controlled. 

A further bit of Mr. Lilienthal's philosophy needs examination. 
He says that government must move from a "negative" posi- 
tion in which it says, "This shall not be done," to a "positive" 
one in which it says, "This is to be done." Again, he turns his back 
on an American political principle. That principle is that govern- 
ment should limit its regulation of a free society precisely on the 
negative note. For the reason we hate censorship is that the censor 
will never halt at the point of telling us what not to write. He 
will end by telling us what to write. 

Mr. Lilienthal, since he retired from government, has apparently 
reconsidered his concept of a "positive" government. For in a 
recent noteworthy article in Colliers he warns the country that 
atomic power must not remain a government monopoly. This, he 
says, would be a fatal threat to private enterprise. That is true. It is 
also true that electric energy, if monopolized by government, is a 
fatal threat to what Mr. Lilienthal calls the "art of development 

{21} 



which is the very heart of the American system . . . fluid, flexible 
and vigorous." 

Finally, there must be considered the deep question of whether 
a continuing subsidy of a part of the people by the rest of the 
people will not ultimately undermine the moral fiber of those who 
receive and impoverish those who give. That is exactly what is 
implied in selling electric power for less than cost. 



[22] 



Ill 

THE COLUMBIA VALLEY ADMINISTRATION 

TENNESSEE AND 
COLUMBIA VALLEYS CONTRASTED 

The proposed Columbia Valley Administration is a close adapta- 
tion of the TVA. The two valleys bear no close economic or geo- 
graphic resemblances. Except for the facts that the projected area 
covers all or parts of several states and that a single river drains it, 
there are few similarities. 

The first striking difference is in the nature and origins of the 
population. 

In the Tennessee region, most of the people engaged in agri- 
culture are the product of long residence. To be frank, their urge to 
progress is not marked. In some sections, there is a lively racial 
problem. In 1948, there were 21 million people in the seven states 
of the region, about half of whom were engaged in agriculture. 
Population increased 15 percent from 1929 to 1948, but the rate 
slowed down to 4.5 percent between 1940 and 1948. Acreage per 
farm was 82, and its average annual income was $1,658 in 1948. 

The people of the Columbia Valley are— or are the immediate 
descendants of— restless, energetic pioneers. About 42 percent of 
the 5.5 million people in the five principal states live on farms. 
The average acreage per farm is 7.33 times that of the Tennessee 
region. The average income is more than three times as great. The 

[23] 



population has increased nearly 50 percent since 1929, and this 
increase has accelerated in the past few years. The rate of increase 
of the population in the Columbia basin during the war was three 
times that of the United States. 

The Columbia people have increased their average income very 
rapidly. The rise has been 117 percent in two decades. This is ten 
percent greater than that of the nation's people as a whole. Their 
share of the national income rose in 20 years from 2.9 percent to 
3.8 percent. 

All this reveals a vital, prosperous, growing section inhabited by 
ambitious, venturesome people. 

The Columbia River drains 259 thousand square miles, 39.5 
thousand of which are in Canada. The Tennessee River watershed 
has only 40.6 thousand square miles. 

Climatic and topographic conditions offer sharp contrasts. The 
Columbia Valley has vast natural differences within itself. In the 
great mountain ranges which cross it, vast masses of snow accumu- 
late, which project raging torrents of flood water into the areas 
below. This provides a stupendous water power potential. Nearly 
half of the Columbia land area is in sturdy and invaluable forests. 
One-fourth is open range; one-tenth is devoted to grazing; and 
one-tenth to raising crops. Land suitable for farming is relatively 
small, with irrigation necessary in one-fourth of what is now used. 
There is unquestioned need for more irrigation if a reasonable 
balance is to be kept with a growing industrial population. Over 
half of the Columbia Valley is Federally owned, of which nearly 
60 percent is national forest. Twenty-eight percent of this is graz- 
ing land and seven percent is Indian reservation. 

In contrast, 65 percent of the Tennessee region is in farm lands. 
In the northern and eastern parts, small farms, pastures and forests 
predominate; in the west and south, large plantations. Climate 
ranges from moderate in the high regions to tropical in the south. 
Rainfall is heavy, especially in the south. The land was rich, but 
has been greatly exhausted. The heavy rainfall offers a large hydro- 
electric potential in the rivers. 

[24] 



The Columbia River flows 1,200 miles, of which one-third is 
in Canada. It is the largest swift river in the nation. Its fall is 
2,652 feet. The Tennessee flows 650 miles, with a total fall of 
1,700 feet. Floods are common along both the Columbia and the 
Tennessee. 

Because of scant rainfall, much of the non-irrigated land of the 
Pacific Northwest is barren. In the Tennessee Valley, irrigation is 
no problem. The need is for reforestation and rebuilding depleted 
land— overfarmed and worked out. A quarter of Tennessee land 
is eroded. 

Both areas are rich in mineral resources, mostly underdeveloped. 

There are great industrial contrasts between the regions. The 
chief Columbia industries are lumbering and fishing. The area 
contains 40 percent of the nation's raw timber. It is rich in phos- 
phates, with 62 percent of the nation's deposits, 80 percent of 
which are Federally owned. But only eight percent of the nation's 
supply comes from the region. 

In the Tennessee region, the chief industries center around 
processing of the products of the land. Both regions export raw 
materials and semi-finished products and import most of their 
finished goods. 

Less than one-tenth of the hydro-electric potential of the 
Columbia Valley has been developed. The dams along the Ten- 
nessee have about used up its hydro-electric potential. Steam plants 
are now called for to supplement water power. 

In the Columbia Valley, private enterprise, which initiated great 
hydro-electric plants, now hesitates to make new investments 
because of the threat of government competition. 

The people of the Columbia region are greater users of electric 
power than are those of the Tennessee. Practically all of the Colum- 
bia farms are electrified, contrasted with 77 percent in those of the 
Tennessee Valley. The average Columbia use of electricity in the 
home is 60 percent higher. The average price per kilowatt hour 
for residential use in the Columbia basin is 1.38 cents, compared 
with Tennessee's 1.54 cents. 

[25] 



THE PLAN FOR A CVA 



The idea of a cva appeared in the general plans of the National 
Resources Board in 1937. It was a major part of Senator George 
Norris' projects until the time of his defeat for the Senate in 1942. 

CVA has been a hotly debated issue in the Northwest for several 
years. Top Interior Department officials including ex-Secretary 
Krug, have been itinerant advocates for the idea since 1945. Assis- 
tant Secretary C. Girard Davidson has apparently been designated 
as its major advocate. Other Cabinet members have endorsed it. 
President Truman signalized the beginning of a real drive for its 
realization on April 13, 1949; and on numerous occasions since, 
he has spoken for it. Various groups dedicated to more govern- 
mental expansion, such as the Americans for Democratic Action, 
have included it in their major objectives. Socialists have taken it to 
heart. It is definitely an article of faith of the Democratic Party. 

A definitive bill for its creation was introduced in the Senate 
(S. 1645) on April 19, 1949, sponsored by Senators Magnuson, 
Kefauver, Humphrey, Chavez, Murray, Langer, Douglas, Mc- 
Grath, Pepper, Sparkman, Hill, Green, Wagner, Taylor, Gillette, 
Johnston (S. C. ) and Johnson, (Texas). Various other versions of 
the plan have appeared in the Eighty-first Congress, but since the 
very exhaustive hearings before the Senate Committee on Public 
Works in May, June, July and August, 1949 were largely based on 
S. 1645, 1 use it in my analysis and criticism which follow. A virtu- 
ally identical bill was introduced by Congressman Hugh Mitchell 
in the House, on which exhaustive hearings were also held. 

It is notable that the word "authority" has been dropped and the 
word "administration" substituted therefor. Presumably, this was 
to soften the implication of a regional dictatorship. This change 
brings to my mind a remark which I heard made by Louis Howe in 
1934. The salty and highly political secretary of the President 
growled, "The Boss seems to be enamoured with the word 
'authority.' He got it from the New York-New Jersey Port Author- 
ity. It sounds too much like dictatorship." 

[26} 



Despite this slight alteration in nomenclature, the CVA plan is 
a blood brother of the TVA. Krug, Davidson and other backers 
are TVA-trained. The essential framework of the plan is copied 
from the TVA. With some variations, the arguments for it are the 
same as those which have supported the TVA. 

The CVA area would include the entire watershed of the Colum- 
bia River, and in addition, the coast area of Washington and 
Oregon, the area around the Puget Sound and almost all of 
Southern Oregon. 

A Columbia Valley Administration would be incorporated. The 
management would be vested in a board of directors appointed by 
the President, with the advice and consent of the Senate. The 
President would designate one of these as chairman. Two would 
be residents of the region, and all three should live there after 
appointment. They would hold office six years after the usual stag- 
gering of the first selections. Their salary would be $17,500 each. 
They would give full time and not have any interest in an electrical 
public utility. 

The TVA idea, originating with Senator Norris, is included to the 
effect that three board members "shall profess a belief in the 
feasibility and wisdom of the Act." 

A section is devoted to saying that advice shall be solicited from 
government and private individuals in the region. 

Broad powers are given to the corporation, including: 

"to construct, operate, and maintain projects . . . necessary for the 
promotion of navigation; for the control and prevention of floods; 
for the conservation and reclamation of lands and land resources; 
for the development and conservation of forest, mineral, and fish 
and wildlife resources; for the generation, transmission, and dispo- 
sition of electric energy; . . . and, in connection with any of the 
foregoing, for the development and conservation of recreational 
resources and for the promotion of sanitation and pollution 
control." 
In carrying out these activities, the Administration might: 

"acquire real and personal property, including any interest therein, 
by purchase, lease, condemnation, exchange, transfer, donation, or 
otherwise, and to sell, lease, exchange or otherwise dispose thereof, 

[27} 



including donations incident to experimentation, demonstrations, 
or other similar uses. . . . Provided, however, that the Administra- 
tion shall have no power to condemn any water right except as it 
may be appurtenant to land acquired incident to the construction 
of dams, reservoirs, or other products or facilities; to make and 
carry out arrangements for the protection, alteration, reconstruc- 
tion, relocation, replacement, or removal of railroad tracks, high- 
ways, bridges, mills, ferries, electric-light plants, and any other 
properties, enterprises, and projects, which have been or are to be 
destroyed, flooded, otherwise damaged, or endangered, as the 
result of any projects or activities of the Administration; 

"to conduct economic, scientific, and technologic investigations 
and studies, to establish, maintain, and operate research facilities, 
and to undertake experiments and practical demonstrations; 

". . . subject to provisions of law specifically applicable to Gov- 
ernment corporations, to determine the necessity for and the char- 
acter and amount of its expenditures and the manner in which they 
shall be incurred, allowed, and paid; 

"to enter into such contracts and agreements, and to take such 
actions as may facilitate the exercise of the powers now or here- 
after conferred upon it by law." 

Provision is also made for the Administration when directed to 
do so by the President, to: 

"construct or operate any of its projects or conduct any of its 
activities through or in cooperation with other departments and 
agencies of the United States; and it may do so through or in coop- 
eration with States, counties, municipalities, cooperatives, indi- 
viduals, educational, and scientific institutions or other bodies or 
agencies, public or private." 

The Administration would carry out its construction work by 
contract "so far as practicable," but it might undertake such work 
itself whenever there are emergency conditions or "where neces- 
sary to provide steady employment for maintenance crews." 

"Title to all property . . . shall be taken in the name of the Admin- 
istration." And "condemnation proceedings shall be had" in the 
name of the Administration. 

While it seems that the Administration would not really absorb 
such Federal agencies in the region as the Forest Service, the Soil 
Conservation Service or the Bureau of Land Management, Section 

[28] 



7 gives the Administration authority and responsibility for develop- 
ing plans which would include all the activities of these agencies. 
And, according to Secretary Krug, also those contemplated by the 
state and local governments. 

It could also prepare vast plans and programs for land, mineral, 
forest, fish and other uses. 

The Administration would annually submit to the President its 
budget for the succeeding year "and such ensuing periods as the 
President may require." As I shall show later, these budgetary 
matters are either confused or designed to permit the Administra- 
tion wide leeway in handling its funds. 

The bill directs that all projects and property of the Bonneville 
Power Administration, the Army Engineers and the Bureau of 
Reclamation shall be turned over to the Administration. 

With respect to electric energy developed by the Administration, 
it would have broad power to dispose of it, but in so doing it 
"shall at all times give preference and priority to Federal agencies, 
to states" and subdivisions "and to cooperative and other agencies 
organized and administered not for profit." Thus, private com- 
panies and users would be discriminated against. It could also 
acquire private facilities. 

Allocations of costs would be made by the Administration and, 
when approved by the President, would be a basis of account 
keeping. Within five years, however, such allocations would go 
via the President to Congress. 

Details with respect to finances I shall discuss later. Also, the 
provisions with respect to appointments, hiring policies, etc. 

It should be noted that many vague extensions of the powers of 
the Administration are scattered through the bill. After a list of 
objectives there is added, in Section 2, "and promoting the general 
welfare." And final Section 19 is a cover-all. The act, it states, shall 
be "liberally construed ... to provide for the national defense, 
improve navigation, control destructive floods and promote inter- 
state commerce and the general welfare." In short, the bill gives 
the CVA most of the powers of the Federal government. 

[29] 



THE ALLEGED CASE FOR NECESSITY 

Advocates of a cva base the urgency of their case on the assertion 
that the Northwest suffers a dire lack of electric power and that the 
coordination of a lot of disjointed Federal activities is essential to 
meet that need. 

In the hearings on S. 1645 last year, Assistant Secretary of the 
Interior Davidson claimed that the area was short of power. Mr. 
Davidson admitted that under present authorities this could be 
provided by dams now under construction if Congress would ap- 
propriate the money. The shortage, if the shortage exists, is due 
to Congress, not to the lack of organized facilities to build the 
power capacity. 

Moreover, Senator Cain repeatedly pointed out in the hearings 
that the city of Tacoma was ready to build new facilities but that 
permission had been denied by the Interior Department because 
of an alleged damage to fish. 

It is an essential fact that the fear of a CVA has checked private 
investment in power projects. Until the fear of competition with 
government is put to rest, private enterprise can do little to meet 
the need. 

In the development of the vast water resources of the Columbia 
Valley, there have been built 86 major power dams, 32 major irri- 
gation dams, 12 major multi-purpose dams, and 539 miles of flood 
control levees. Last year 3.8 million acres were under irrigation. 
There are three major navigation channels. 

Between 2.5 and 3 million kw of hydro-electric power have 
been developed, about half by private and municipal money and 
half by the Army Engineers and the Bureau of Reclamation. About 
5 million kw more are already authorized to be provided by the 
government. An additional 5 million kw has been recommended. 

The long hearings on the bill provided extensive evidence from 
opponents as well as from sponsors of a CVA that additional electric 
power could be used. This is a claim that can be made and is 
being made with equal urgency by many other regions. The North- 

[30] 



west, however, presents a special claim, because it has little or no 
coal and very little oil. Its greatest resource is water. It can be 
conceded that more electric power is needed and that the natural 
resources exist to supply it. That brings us to the question of 
whether a CVA is the best or only way to get it. 



THE NORTHWEST HAS OTHER PLANS 

It is the contention of the governors and other responsible people 
of the Northwest that ample means already exist to administer the 
power already developed and to plan and build for the future. They 
resent the notion that a master plan must be superimposed as it was 
in the Tennessee Valley, where little or no local coordination 
existed. 

First, there is the Bonneville Power Administration, the function 
of which is the cooperative marketing of public and private power 
through a pooling system. It is a striking illustration of cooperation 
among Federal, state, local and private producers and consumers. 
The visitor to the Northwest hears nothing but favorable comment 
about this method of distribution and marketing. 

In the field of planning for future developments, there is the 
famous "308" report of the Army Engineers, in the creation of 
which the Bureau of Reclamation and other Federal agencies have 
cooperated and in which the advice and help of local and state 
governments were used. It has been carefully explained to the 
region in many ways and, when it is clear that all concerned are 
informed and agreed, it will go to Congress for approval. 

There is also the Columbia Basin Inter-Agency Committee, con- 
sisting of representatives of the Departments of the Interior, of 
Agriculture and of Commerce, the Corps of Army Engineers, the 
Federal Power Commission, the Bonneville Power Administration, 
and the governors of the seven basin states. It has agreed upon a 
six-year program involving $2.5 billion in new development. 

Beyond these, there is in process of negotiation among the states 
of Oregon, Washington, Montana, Idaho and Wyoming, a Colum- 

[31] 



bia River Compact, through which coordinated development can 
be carried on in full cooperation with the Federal government. 

These activities, in which there is full participation not only by 
the Federal government which provides funds and technical skill, 
but also by the owners and users of the resources, seem to be the 
best answer to the proposed CVA. 

GENERAL CRITICISMS OF THE CVA PLAN 

At the risk of some repetition, I shall list here briefly a number 
of specific criticisms of the CVA plan as embodied in S. 1645. Later, 
in my general criticism of the whole valley authority concept, these 
points will be developed at length. 

Concentration of Power 

President Truman, following the line of argument set up by 
other supporters, says that the CVA cannot have more power than 
is now exercised by the various Federal agencies in the region, 
because it merely joins them together. 

Assuming that no new powers are created, the very act of joining 
them creates new and less responsible power. When many are 
joined, a power is created greater than the mere "sum of the parts. 

It is not, however, correct to say that no new powers are created. 
I shall amplify this point later in my general criticism of the whole 
regional authority concept. 

Lack of Responsibility to the Region 

While it is argued that a CVA would place control and power in 
the region rather than in Washington, the fact is that the control 
by the people would be less effective than it is now. Three directors 
of the Administration appointed by the President would possess 
vast power. The power of the voters over them would be remote. 
The citizen now elects his congressman, who has power over the 
appropriations for the respective Federal bureaus operating in the 
region. There is a direct channel of contact. The citizen under the 

[32] 



CVA would have no such line of effective influence on the directors 
of a CVA. Those directors would be another and very formidable 
barrier between the citizen and his congressional representative. 

Inadequate Responsibility to Congress 

The plans and proposals of the CVA would go, together with its 
requests for appropriations, directly to the appropriations com- 
mittees of the two Houses. The present supervision of the public 
works committees of Congress would be absent. The directors 
of the CVA would in effect take over the policy-determining func- 
tions now exercised by Congress. 

Invasion of State and Local Governments 

Dominion over natural resources is constitutionally vested in 
the states. This has been affirmed over and over by the Supreme 
Court. Development of these resources is a state function. Even 
when the Federal government builds great improvements, state 
ownership and responsibility do not change. But under a CVA, the 
corporation would in effect absorb this state authority. Except for 
irrigation purposes, the bill does not require the CVA to comply 
with state law. Moreover, the bill removes the CVA from the 
authority of the state courts, for it is provided that "any proceeding 
. . . may be removed by the Administration to the District Court 
of the United States." 

The states lose their chance to appear before the public works 
committees of Congress in matters affecting their vital interests. 

Vast taxable resources are removed from states and local gov- 
ernment, and their only compensation for this would be sums "in 
lieu," given at the discretion of the CVA. 

Under the guise of "advisory" help, the CVA could employ an 
indeterminate number of citizens, including lawyers and others. 
This could be a sinister political danger to local government. 

Finally, since the CVA powers are based upon two Federal 

[33] 



powers— national defense and the commerce clause— almost any 
power could be exercised, despite state objections. 

Destruction of Private Enterprise 

A CVA could, under its broad powers, engage in a variety of 
businesses, large and small, in deadly competition with private 
businesses. It could, through control of resources, vitally affect the 
great lumber industry. It could prevent the construction of any 
new electric power facilities by the use of private capital and, of 
course, force the sale to it of existing electric utilities. It could 
foster cooperatives of all kinds. It could determine the size of 
farms. The control of water and the electric power and irrigation 
derived therefrom would make it the economic master of the 
region. 

Control by Allocation 

As in the TVA, allocation would be the source of unlimited power 
and a means of beclouding all of its financial aspects. 



[34] 



IV 



THE MISSOURI VALLEY AUTHORITY 



THE UNIQUE FEATURES OF THE REGION 

The characteristics and problems of the Missouri Valley are 
unique. Here it is more a conservation and resources development 
problem than a water problem. However it, too, is an undeveloped 
area. 

The Missouri Valley is much larger than that of the Tennessee or 
the Columbia. It takes in parts of ten states and represents 17 per- 
cent of the United States. In this area reside about eight million 
people. Floods and drought have beset them for years. Serious 
droughts have occurred every ten to fifteen years, the one in the 
'Thirties recent enough for all of us to remember its serious effects. 
During years when there has been adequate rainfall, major floods 
have occurred. The 1947 flood, for instance, caused $111 million 
in damage. The problem has always been periodically too much 
water in the lower basin and too little in the upper basin. 

This water problem is due basically to the type of agricultural 
production pursued. In times of good crops, farmers expand acre- 
age to produce as much as they can, using the submarginal land. 
When yields drop because of unfavorable conditions, they continue 
to use every bit of land in an effort to maintain income. The drought 
then takes a much heavier toll in terms of wind erosion than if the 
farmer had given this land a rest. The whole life of the region is 

[35] 



dependent on agriculture. When crop failures come, families starve 
or move away. 

The region contains other basic resources such as coal, petroleum, 
natural gas, minerals, etc., whereby industries could be developed. 
However, manufacturing has never become important, mainly 
because of the freight rate disadvantage. There is also a lack of 
skilled labor, but this could be more readily solved than the freight 
rate differential. Cheaper electric power might help encourage 
industry to locate in the area. But in 1948 there were only 1.7 mil- 
lion kilowatts of capacity. 

The scarcity of water has brought about a series of sharply con- 
flicting water laws in the different sections. The upstream states 
use the appropriation theory, which means that the first to declare 
beneficial use of the water can retain it. As there is insufficient water 
for all uses, the downstream states suffer. These differences have 
been settled to date by court litigation and by interstate compacts. 

Two main types of land are found in the Missouri Basin. There 
are 16 million acres of national forests, in which are found many 
of our most important national parks. Public lands represent about 
one-sixth of the total land area. Most of the rest of the land can be 
called "the wide open spaces." About three-fourths of the total land 
is in farms and approximately one-eighth of the irrigated farms are 
already receiving Federal water. 

Because of the intermittence of successful crop years and full 
dependence on agriculture, the Missouri Basin has been falling 
behind the rest of the United States in economic progress. The 
Bureau of the Census has taken advantage of this decline to issue 
a comparison of progress in the Tennessee Valley in a recent fifteen- 
year period with the decline in the Missouri Valley. The Missouri 
Valley lost in population; farm tenancy decreased less rapidly; 
electricity use spread more slowly; the acreage value, which was 
originally more than in the Tennessee Valley, declined to almost 
half of that in the Tennessee Valley. 

Population for the ten states showed a 2.3 percent increase 
from 1940 to 1948, compared with 11 percent for the nation; per 

[36] 



capita income payments increased 152 percent from 1929 to 1948, 
compared with 107 percent for the nation; and 43 percent of the 
farms had been electrified by 1945, compared with 48 percent for 
the nation. 



PRESENT PLANS FOR THE MISSOURI VALLEY 

Although considerarle action has been taken to solve the prob- 
lems of the Missouri Valley, this has been insufficient and on a 
piecemeal basis. The Bureau of Reclamation has undertaken irri- 
gation work ever since 1903, transportation facilities have been 
well developed, flood control has been carried out by the Federal 
government and private individuals, and some power has been 
developed. However, the great drought of the 'Thirties showed how 
inadequate these measures were. As a result, we had the Taylor 
Grazing Act of 1934 to restore grazing land, a more comprehensive 
plan for water resource use by the Bureau of Reclamation, and the 
introduction of soil conservation. 

A serious Spring flood in 1943 brought forth further action. The 
Army Engineers went to work on a program of flood control for 
the lower river. This was the Pick Plan. About the same time, the 
Bureau of Reclamation Sloan Plan, which had been in preparation 
for years, was released. Although these plans were somewhat com- 
plementary, they had to be dovetailed. This consolidation was 
hastened by President Roosevelt's recommendation to Congress in 
September, 1944 that a Missouri Valley Authority be created along 
the lines of the Tennessee Valley Authority. This forced the com- 
promise, the Pick-Sloan Plan, which has been authorized. It calls for 
three new major multi-purpose reservoirs, 24 secondary reservoirs, 
and 78 lesser reservoirs, artificial levees to protect 1.8 million acres 
of cultivated land in the lower valley, irrigation water for 4.8 million 
acres of unirrigated land and supplementary water for 500 thousand 
acres, and 1.6 million kilowatts of additional hydro-electric 
capacity. 

[37] 



In order to obtain a more comprehensive view of the problems of 
the region and to consolidate the work of the Army Engineers and 
the Bureau of Reclamation with other interested agencies, the 
Missouri Basin Inter-Agency Committee was formed in 1945. This 
committee is composed of representatives from the Departments 
of Army, Commerce, Interior, and Agriculture, the Federal Power 
Commission, and the ten states. An altered Pick-Sloan Plan, pro- 
jecting increased irrigation and a power output of almost two 
million kilowatts, is now in progress. The entire project, covering 
six years will cost more than $6.5 billion. 

There is also being developed by the Department of Agriculture 
a plan for the development of water control and land improvement 
in the upper ranges of the watersheds. That, it is estimated, will 
call for an additional $2-$3 billion over a period of years. 

The Hoover Task Force on Natural Resources published a report 
somewhat critical of all these Missouri Valley plans. Its findings 
have been sharply challenged by the Inter-Agency Committee and 
the Federal agencies concerned. The issues involved need not 
concern us here, because both sides of this controversy see no need 
for an MVA. 



THE MISSOURI VALLEY AUTHORITY PROPOSAL 

Despite the great natural and man-made contrasts between the 
watershed of the Missouri and those of the Tennessee and Colum- 
bia, the Administration apparently proposes to go ahead with an 
MVA grand design along the general lines of the TVA and the 
CVA. The first MVA bill was introduced in 1944, and a somewhat 
revised version has appeared each year since. A bill, S. 1160, intro- 
duced by most of the same sponsors as Columbia S. 1645, appeared 
in the Eighty-first Congress. The MVA bill included as a sponsor 
Senator Milton R. Young of North Dakota, who was not one of the 
CVA group. Lyndon Johnson of Texas, who sponsored CVA, is 
missing from the MVA group. 

[38] 



There are a few variations in the two bills which I shall bring 
out in the following analyses, none of which fundamentally alter 
the nature of the plan. 

There has, however, been less Interior Department propaganda 
for the MVA plan, probably because the best talent of the Depart- 
ment has been busy working for the CVA and because it is planned 
to push the MVA after the possible passage of the CVA. 

S. 1160 is more voluminous than S. 1645 and there are more speci- 
fied purposes. But since both bills contain the inevitable generality 
—in CVA "and promoting the general welfare"; in MVA, "and for 
other purposes"— it is unnecessary to note the differences in 
specifications. 

The MVA bill retains the TVA word "Authority," which in CVA 
was softened to "Administration." 

The MVA provides for five directors at a higher salary— $20,000 
annually— than the $17,500 for CVA. Three of the five must have 
been residents of the valley for at least five years. No ideological 
test is required, as in TVA and CVA. The term of office would be 
nine years. 

While in CVA advisory functions by local people are left pretty 
much to the directing board, a somewhat elaborate advisory setup 
is provided for MVA. The advisory board consists of the governors 
of the states in the valley, representatives of interested Federal 
agencies and twelve citizens of the region, representing various 
economic interests therein. This board, however, shall advise only 
on matters put up to it by the board. 

The powers granted to the board are somewhat more elaborately 
stated but in general they cover the same wide range as those given 
by the CVA bill. They begin with "objectives" thus stated: 

" to provide for the control and prevention of flood in the Missouri 
Valley region, the reclamation of public lands, and for the appli- 
cation and use of the waters of the Missouri River and its tribu- 
taries on the public and private lands of the area for irrigation and 
other useful purposes, to safeguard the navigable waters, to pro- 
mote navigation, to encourage a sound agriculture, to encourage 
industrial development, to preserve and develop the recreational 

[39] 



advantages, and to foster the fuller utilization of the resources of 
the region, all for the purpose of fostering and protecting commerce 
among the several States, strengthening the national defense, con- 
serving the water, soil, and forest resources of the Nation, and 
promoting the general welfare of the United States . . ." 

The "policy of the United States" is declared to be the creation of 
"a broad program of unified water control and development" in the 
region. The interests and rights of the states are recognized to the 
fullest "possible" extent. In the CVA the word "practicable" is 
used. And the policy is further declared to be to respect "any vested 
right" acquired from the states or held by the states or the Federal 
government. But this whole expression of concern for existing 
rights is qualified by a broad grant to the Authority to acquire 
property or rights by "purchase, lease, condemnation or donation" 
within the scope of its powers, activities and plans. 

The powers and duties of the Authority include those of acquir- 
ing, constructing and improving all conceivable facilities for the 
uses of water. These include all the purposes described in the "ob- 
jectives" stated above, plus the development of electric power and 
its distribution, irrigation and some general powers which would 
seem to allow the Authority to get into a variety of businesses in 
conjunction with cooperatives or public agencies. 

The preferences to be shown publicly owned and cooperative 
agencies over private businesses, so notable in the CVA plan, are 
more explicitly stated in the MVA plan. The sale of electric power 
to consumers is not to be at "cost," but at "reasonable rates." 

In the improvement of lands, it is provided that costs shall be 
reimbursable in full but "with or without" interest and on such 
terms of repayment "as the Corporation may deem reasonable and 
proper." 

The Authority is given broad powers to extend credit to local 
governments and cooperatives for work in line with the objectives 
of the plan. 

The powers of eminent domain given to the MVA are elaborately 
listed. 

[40] 



An interesting variation of the MVA is the directive in the bill to 
formulate a plan for the development of the region. The general 
specifications of the plan cover seven pages of the bill. 

Also, presumably to meet objections from state and local gov- 
ernments, the advisory functions are spelled out in detail. 

No farmer shall enjoy irrigation provided by the Authority on 
more than 160 acres of land. If he owns more than this acreage, he 
may still, subject to certain conditions, get the water, but he must 
undertake to dispose of all land in excess of his 160 acres. The 
Authority shall determine the fairness of the amount of money he 
shall receive for his excess acreage. This is to prevent a larger land 
owner from reaping any increase in value due to the irrigation of 
his 160 acres. The apparent objective in all this is a leveling off of 
holdings to 160 acres generally on all irrigated land. 

In the disposition of electric power to individuals, rates shall be 
"reasonable." Presumably, the Authority shall determine the mean- 
ing of "reasonable." 

The allocation of costs in multi-purpose facilities shall be made 
by the Authority. Then such allocation shall be submitted to the 
President, and, if such allocation is not disapproved, it shall be 
final. After three years, such allocation shall be filed with Congress. 
But such allocation shall be made in such terms as "to encourage 
the widest possible economic use of water for irrigation and of 
electric energy." 

This, as in CVA and TVA, is the heart of accounting costs. For 
in such allocation the greater the charge to non-reimbursables such 
as flood control, the less the production of electric energy will seem 
to cost. This is the final determinant of the monopolistic element in 
any competition with private power companies. 

The Authority "as an instrumentality of the United States shall 
have access ... to all methods, formulas and scientific information" 
in the U.S. Patent Office. And it can use what it learns. Any owner 
of patent rights whose property has been thus used can sue in a 
district court. 

[41] 



As in CVA, there is provision for payments to states and local 
subdivisions in lieu of taxes because of removal of property from the 
tax rolls. The Authority has final power to determine what is paid. 

The employment policies in the M VA plan generally follow those 
in the CVA. 



GENERAL COMMENT ON THE MVA PROPOSAL 

After the recommendation of President Roosevelt of an MVA, a 
bill, S. 555, was introduced and referred to the Senate Committee 
on Irrigation and Reclamation. That bill was essentially the same 
as S. 1160, described in the foregoing pages. A sub-committee com- 
posed of Senators Overton, O'Mahoney, Gurney and Butler con- 
sidered the bill at length, heard the testimony of a good many 
people and submitted an adverse report. In this report, note is 
taken of the almost solid opposition of the leaders of the region, 
including governors, senators and congressmen. 

It recited among its objections essentially the objections that 
appear under my criticism of the CVA. And it concluded that 
adequate plans and progress were under way to assure the develop- 
ment of the Missouri Valley. 

Despite this, as we have seen, the idea has been kept alive in 
S. 1160, sponsored, it should be noted, by eleven senators from 
outside the Missouri Valley and by only five from the ten states 
directly involved. The lack of popularity of the MVA in the region 
was notable in 1948, when, according to Governor Peterson, no 
congressman in the basin endorsed it in his campaign. 

Since the MVA proposal parallels so closely the CVA, I shall 
include my criticisms under a general consideration of the whole 
concept in a later section. 



[42] 



V 

THE UNITED AUTHORITIES OF AMERICA 

The first bill to set up regional authorities for the United States 
as a whole was introduced eight to ten years ago, and another has 
been introduced each year. The most recent bill is H. R. 894 in the 
Eighty-first Congress. Although Representative Rankin was the 
sponsor of this bill, he did not originate the idea. President Roose- 
velt was the first to promote such a plan. 

It is hard to determine who is behind the Rankin bill. The De- 
partment of the Interior seemingly is not behind it. It appears that 
those in power in our government would prefer to introduce these 
bills for regional authorities one at a time, rather than impose a 
plan for the whole United States. 

Since we are going to be constantly faced with the problem of 
rejecting or accepting such measures, it is appropriate at this time 
to show in some detail how overwhelming the powers could be. 

The purpose is as follows: 

"to develop, integrate, and coordinate plans, projects, and activities 
for or incidental to the promotion of navigation, the control and 
prevention of floods, the safeguarding of navigable waters, the 
reclamation of the public lands, and the generation, sale, and dis- 
tribution of electric energy, in order to promote agriculture, to 
improve living conditions, to aid and protect commerce among the 
several States, to strengthen the national defense, to conserve the 

[43] 



water, soil, and forest resources of the Nation, to stabilize employ- 
ment and relieve unemployment, and otherwise to protect and 
promote the national interest." 

With these powers, particularly the last, the Directors could intro- 
duce any kind of planned economy that might occur to them. 

This bill creates nine incorporated conservation authorities as 
follows: 1. The Atlantic Seaboard Authority, 2. The Great Lakes- 
Ohio Valley Authority, 3. The Tennessee Valley Authority, 4. The 
Missouri Valley Authority, 5. The Arkansas Valley Authority, 
6. The Southwestern Authority, 7. The Columbia Valley Authority, 
8. The California Authority, and 9. The Colorado Valley Authority. 

It is stated that nothing in the bill can change the Tennessee 
Valley Authority. 

The authorities would be able to acquire and dispose of real and 
personal property, even by condemnation, and enter into such con- 
tracts and agreements as each authority might deem necessary or 
appropriate. 

The authorities would be under the supervision of the President. 
They should endeavor ( insofar as practicable ) to coordinate and 
integrate their work with that of the other Federal agencies. They 
should (insofar as practicable) consult and cooperate with the 
states and public and cooperative agencies. 

The authorities' plans would be submitted to the President once 
a year. These plans should give due regard to "such economic, 
social, and cultural values as may be affected or furthered by the 
projects and activities." They also could maintain laboratories, ex- 
periment stations and carry on any research they wished. 

They could carry on all their own construction, except dams and 
their works and generating facilities to be constructed by the 
Army Engineers. 

They could develop and provide methods of land and water 
utilization "as the authority deems necessary or appropriate to 
prevent and abate floods and droughts." Evidently the Bureau of 
Reclamation would be out. 

[44] 



They could dispose of all power not needed to operate projects. 
They could provide transmission lines and other structures needed 
to bring power and water to existing and potential markets. They 
would give preference to states, districts, counties, municipalities, 
and "to cooperative and other organizations not organized or 
administered for profit but primarily for the purpose of supplying 
electric energy or water to their members as nearly as possible at 
cost." They could sell water and power not only at wholesale, but 
also at retail, to farms and rural communities which they found 
were not "adequately serviced" at "reasonable rates." They would 
retain control over resale and resale rates. 

Rates would be set to cover costs of generating and transmitting, 
plus appropriate reserves and amortization of capital investment. 
There would be no interest, no Federal taxes, no "in lieu of" state 
taxes. Costs would be allocated as each authority "deems necessary 
or appropriate" to promote sound national economy, to encourage 
widest possible economic use, and to avoid imposing on one part a 
greater share of the costs than it could bear. These allocations would 
be subject to Presidential approval. 

States could enter into agreements or compacts to carry out the 
purposes of the Act, but they would not be effective until approved 
by the authority. 

Practically nothing could be constructed without consent of 
the authority. 

On the labor end, executive employees would be selected and 
salary fixed by the authority. Other employees would be under 
Civil Service. These authorities would deal collectively with the 
employees. 

They would be directed to advertise for bids on purchases and 
contract work, but as they saw fit, and there would be enough 
exceptions so that they could find an excuse to do their own work. 

The authorities would be able to pay their own expenses, and set 
up their own books, except for audit by the Comptroller General. 
Even then, the audit could not be filed until the authority examined 
it and included its comments. 

[45] 



All litigation would be limited to the District Courts of the 
United States. No injunctions would be allowed. No state court 
should have jurisdiction. The provisions would make it most diffi- 
cult and expensive to take legal action against the authority. 

They could condemn anything 

"which in the judgment of the authority is necessary or appropriate 
for or reasonably incidental to the carrying out of the purposes of 
the authority under this Act or any other law of the United States." 



[46] 



VI 

DANGERS AND DEFECTS 
OF AUTHORITY PLANS 

A PHILOSOPHY OF FEUDALISM 

A blunt and informed man, Secretary of the Interior Harold Ickes, 
uttered this warning to a Congressional committee which was con- 
sidering the proposed MVA: 

"You have before you not merely a question of establishing a single 
authority, for eventually the Congress will not do less for one 
watershed than for another. Therefore, there is before you a major 
step in the basic reorganization of the Government of the United 
States. ... It is a theory that strikes at the very roots of our Gov- 
ernment organization." 
The revolutionary concept of dividing the nation into great 
regions shaped by the natural boundaries of watersheds is, to say 
the least, a dazzling innovation. It seemed easy because water, the 
universal source of life, provided a common interest for everyone 
in a region. To those who are impatient of precedent and tradition, 
it suggested a newly oriented nation. It suggested the means within 
each region of unlimited concentrated power— power for the im- 
provement of human life and power for those in control. And since 
there is an eternal urge to plan the lives of others, it offered 
unlimited scope for an insatiable instinct. 

[47] 



These initial inspirations of the proponents of the regional 
authority concept failed to take into account the many tangible and 
intangible problems and values that were involved. These have 
consistently thrust themselves forward in the thirteen years since 
the TVA plan was suggested as a national pattern. Deeply rooted 
institutional principles have obtruded themselves. Durable loyal- 
ties to the Federal system, to state sovereignty, to self-government 
and to individual enterprise and freedom have created opposition. 
And hard problems of engineering, law, and finance have appeared. 

As a result, time has been bought for attentive study and long, 
careful review of the realities. 

The plainest reality of all is that this new concept is not new at 
all. It is as old as feudalism. It is the bartering of individual liberty 
for the promise of material benefit. On the one side, there is the 
willingness on the part of the individual to surrender something of 
self-government and self-determination; on the other, a govern- 
ment that promises the assurance of protection and care. 

MEAGER PROOF OF NEED 

As in every case in which people entrusted with the power of gov- 
ernment seek the adoption of a drastic reform, the proposals for 
new valley authorities have pressed the point of emergent need. 
To a degree, they have at the same time vitiated this argument, for 
they also claim that no new powers and no more money are required 
in an authority. 

But the establishment of a need or desire of a region for more 
electricity or more irrigation does not in itself justify the claim that 
a valley authority is the only way to meet the requirements. As I 
have noted in the case of the CVA, the need is demonstrable, 
but within the limitations of the present Federal developmental 
plans it is being met as fast as funds and engineering can supply it. 
Moreover, there is ample evidence that private and local govern- 
ment funds would be readily available for a more rapid develop- 

[48] 



ment under a favorable government policy. And in the Missouri 
Valley, it was shown by the Overton Committee in 1945 that the 
creation of an authority would seriously delay the construction of 
authorized and necessary works already under way. 



TVA AN INCOMPLETE EXPERIMENT 

The active proponents of the watershed authority plan are of 
course mostly graduates of the TVA. The "success" of the TVA is 
the major claim for the new plans. But despite vast propaganda, the 
TVA is still within the realm of debate. 

The Hoover Commission Task Force on Natural Resources, com- 
posed of a distinguished group headed by Leslie A. Miller, former 
Governor of Wyoming, says this in reply to the claims of valley 
authority advocates : 

"The starting point for an evaluation of the valley authority type 
of organization is the experience of TVA. It is essential, however, 
to keep in mind certain limitations on the applicability of this 
experience. 

"a. Although TVA was established 15 years ago, there is still no 
objective comprehensive study of its experience, 
"b. Even where results of its operations are reasonably clear it is 
not easy to decide what is due to type of organization and what to 
other circumstances." 



GREAT DIFFERENCES IN REGIONS 

It is certainly forcing an analogy to suggest that, because the 
Tennessee, the Columbia and the Missouri lie in separate valleys, 
their civilizations are properly subject to uniform treatment. Eco- 
nomic, political, cultural and many other differences exist. In fact, 
there are vastly more numerous differences than similarities. They 
certainly invite no Procrustean pattern imposed from without. 

[49] 



Here also the Hoover Commission Task Force offers a word 
of caution: 

"Conditions differ widely from one river basin to another, raising 
questions as to the extent to which TVA's experience is a safe guide 
for predicting the way in which similar organizations would work 
in other areas. 

"Because of the complexity of interrelated resource problems in 

the Tennessee Basin, the legislative authority of the TVA to deal 

with these problems is quite broad— broader than may be required 

for Federal agencies operating in basins having less difficult 

problems." 

It should also be noted that these plans set up units vastly more 

powerful than single states. There is already great rivalry among 

states for Congressional grants. Consider the rivalry that would 

prevail among these new giants armed as they would be with 

immense powers of propaganda and lobbying. 



WATERSHED REGIONALISM OUTDATED 

Important as have been river valleys in shaping common interests 
which lie at the basis of political subdivisions, it is clear that they 
are now overrated and declining in significance. The distribution 
of water and the direction of navigation are only two of the unifying 
elements in modern life. 

Proponents in presenting their plans so emphasize these few 
common concerns as to make them appear paramount. This is done 
by simple devices of high-lighting and underlining. Innumerable 
differences fade into the background. 

Integrated regions can never be fixed by mere natural factors. 
Unceasingly there operate many other factors, economic, political, 
cultural, and ethnological. Constantly changing methods of trans- 
portation, communication and distribution are present. To seize 
upon the most ancient of dividing lines is certainly a surprising 
suggestion from people who are constantly reminding us that they 
and they alone live in the future. 



[50] 



A case can be made for many other bases of regional groups of 
states. An illustration of this is offered by the Braniff Air Lines in 
a most interesting piece of promotion. It shows the essential busi- 
ness integration of a region running from Chicago southwest to 
Texas, with its southern end at one of the great avenues to the 
South American Continent. 

Railroad systems make a case for the regional unity of their 
territory. Governmental activities set up regions for administrative 
purposes. Big manufacturing concerns block out their distribution 
areas by regions. 

In fact, so many regional interests cross and recross each other 
that common sense might suggest that we leave the states as they 
are and treat regional interests in many different and specific ways. 
In the light of modern developments in technology and communi- 
cation, we might well hesitate before we freeze our nation in a 
pattern made by nature millions of years ago. 

Moreover, even when we consider the flow of water as an agent 
of unification, there are objections to the watershed concept. For 
the basin idea breaks down when water is diverted from one basin 
to another, as from the Colorado to the Missouri. 



INADEQUATE RESPONSIBILITY 
TO CONGRESS AND THE PRESIDENT 

The spurious argument is advanced that authorities mean decen- 
tralization. They would, it is said, take power from far-away 
Washington and deposit it in the region, comfortably within the 
reach of the citizen. 

At the present time, representative government provides for the 
citizen congressmen and senators elected by him and bound to 
represent his interests in Congress and in contacts with the national 
Administration. 

This line of control is greatly impaired under an authority. The 
citizen is confronted with directors who are, in fact, a barrier 



[51] 



between him and the government over which he is at least theoret- 
ically the master. 

It was clearly brought out in the 1949 hearings on the CVA that 
actual control of Congress over the directors would be vitiated. 
The proposals and plans of the CVA would not go initially to the 
committees on public works, as is now the case with plans of the 
Federal departments. They would go in the form of requests for 
money directly to the appropriations committees. This would by- 
pass the public works and other committees which are specially 
qualified to pass on such projects. The busy appropriations com- 
mittees must deal with everything and should be guided by other 
committees with special competence. Thus, in effect, the directors 
of the authorities would be substituted as reviewing agencies for 
responsible Congressional action. 

The control of the President over the directors of the authorities 
would be exceedingly weak. In the CVA plan, three directors would 
be appointed— after the first group— for terms of six years. Under 
an MVA, five directors would serve nine years. Thus, except for 
death, resignation or removal, Presidents would have great diffi- 
culty in altering the policies of the authorities by new appointments. 
Removal would be very difficult indeed. President Roosevelt found 
this to be true in his removal of Arthur Morgan of the TVA. He 
used the vague charge "contumacy," which is not a stated reason 
for removal and which has an extremely weak judicial status. The 
term was one that had not been prominent in political debate 
since the seventeenth century when the Stuart Kings— and later 
Oliver Cromwell, the first modern dictator— applied it to their 
political opponents. 

It was clear at the time that if Morgan had been able to avail 
himself of the means and the persistence to fight his removal and 
if the courts had followed earlier decisions, the removal could not 
have been made at all. Thus, the directors would be fairly inde- 
pendent of the President and, as a matter of course, of the Depart- 
ment of the Interior. 

[52] 



In the TVA Act and the CVA bill appear words which must be 
used in determining the qualifications of directors. In the CVA bill 
they must "believe in the feasibility and wisdom of the Act." This 
is a qualification based not upon experience or technical skill but 
upon ideology. It means, if it means anything, that whoever con- 
ceived it— probably Senator Norr is— realized that the authority 
concept involved a very special philosophy not commonly held by 
all Americans. This legislative curiosity is omitted from the 
MVAbill. 



FEDERAL FUNCTIONALISM SACRIFICED 

Despite many shortcomings, the essential principle of our Federal 
bureaucracy has stood the test of experience. That principle 
involves the creation of bureaus and agencies at the center of gov- 
ernment, whose functions are specialized and which provide serv- 
ice to all parts of the nation. This enables the creation at the top 
of expertness and knowledge that flow directly out and down to 
the point of application. In the case of the Federal activities that 
would be incorporated in the proposed authorities, this service 
would be interrupted. The authorities would set up their own 
centers and sources of expert service. That this would be a waste 
and a contraction of specialized knowledge and service cannot be 
doubted. It would not be unlike setting up a little West Point and 
War College in each military district, independent of the Pentagon. 



AUTOCRACY OF AUTHORITIES 

Thus shielded from Federal control and, as we shall see, inde- 
pendent of state and local restraint, the authorities would enjoy vast 
and autocratic power. As I noted under the CVA, it has been 
asserted by President Truman and others that an authority cannot 
have more power than the aggregate of present agencies. The 
answer is that the binding together of powers under the shield of 

[53] 



irresponsibility to the President, Congress and the states, creates a 
greater and indefinite power. The Roman Fasces of more recent 
and unhappy memory in Italy signalized concentrated power made 
from joining disparate powers— a bundle of rods with an axe in 
the middle. 

But there are new powers, some designated, some implied. The 
habit of draftsmen in recent years has always been to throw in 
plenty of discretion. The bills have many expressions such as 
"necessary to carry out the provisions of said Act," "as it deems 
necessary and proper," "such economic, social and cultural values 
as may be affected and furthered," "to the fullest extent deemed 
practicable by the Corporation," "such powers as may be necessary 
or appropriate to effectuate the purposes," etc. 

This, for another example, is from the MVA bill: 

"The Corporation is authorized, if in its judgment the interests ot 
economy and efficiency will be served thereby, to construct or 
operate any project or conduct any activity entrusted to it through, 
or in conjunction with, other departments and agencies of the 
United States, or in conjunction with States and subdivisions or 
agencies thereof ... or other public or cooperative agencies." 
Note the words "cooperative agencies," which in fact operate a 
limitless range of businesses. A similar generality is in the CVA bill. 

The bills authorize the creation of general development programs 
encompassing all present Federal activities, with no quantitative 
or qualitative limitation. Authorizations of existing agencies have 
such limitations. Scientific and economic investigations may be 
made of a nature so general as to cover every phase of life in the 
regions. There are no limitations on this authority. Investigations 
may invade Federal and state agencies not included in those 
directly taken over by the authorities. Fish and wild life activities 
are an example of this. 

At present, there are functional divisions of concern and interest 
vested in specific agencies. Soil conservation, for example, is a 
specialized matter, the problems of which are similar in all parts 
of the nation. This would be lumped together with all other prob- 

[54] 



lems in a composite in which the favored activity of the authority 
would predominate. 

With reference to water rights, present law is fairly specific and 
is within the jurisdiction of the states. The plans would change 
this and substitute the judgment of an administrative board. 

These and many more powers would be taken from Federal and 
state agencies and concentrated in a single authority. 

Under the terms of the CVA bill, the authority may "undertake 
experiments and practical demonstrations." Suppose it should try 
a "practical demonstration" of running a steel mill or a retail 
grocery business? 

Only limitations of space bring this summary of powers to an 
end here. The reading of S. 1645 and S. 1160 should convince any 
person of common sense that under a CVA and an MVA there 
would be established in the states concerned new agents of govern- 
ment authorized to operate in practically every phase of public 
and private life, and which would be virtually independent of local 
control. 

THE INVASION OF 
STATE AND LOCAL GOVERNMENT 

Governor langlie was guilty of no overstatement when he de- 
clared that a CVA would reduce the states concerned almost to a 
"territorial status." The same could be said of the effects of an MVA 
on the states in that region. 

Since the two proposals are so much alike, it is sufficient here to 
present some of the features of the CVA proposals in their effect 
upon state and local government. 

The development of natural resources is not among the consti- 
tutional powers of the Federal government. It is vested in the 
states. This is exhaustively proved in a legal opinion by Fred J. 
Cunningham, introduced by Governor Langlie in the 1949 Con- 
gressional hearings on the CVA. Despite this, Congress would vest 
these powers, which it does not really possess, in a public corpora- 

[55] 



tion. The Cunningham brief shows how these state powers have 
been absorbed under the TVA. But in the CVA plan, even more 
powers are taken from the states and vested in the administration. 

Except for irrigation purposes, the bill does not require the CVA 
to comply with state law. 

The bill utterly ignores the process by which states through inter- 
state compacts may divide the uses of waters of interstate rivers. 

Moreover, the plan effectively removes the CVA from the juris- 
diction of state courts. It is provided that: 

"any proceeding brought against the Administration in any court 
of any state may be removed by the Administration to the District 
Court of the United States." 

Since the new plan ignores the Congressional practice of two 
steps in initiating a project— first, the "authorization"; next, the 
"appropriation"— the states are denied their two chances to know 
what is planned for them and to appear and assert their views. In 
fact, there is no real provision for advising the states of the plans 
of the CVA at all. 

The removal of the huge properties of the CVA from the taxable 
resources of the states and local governments would of course place 
a crushing burden on other taxpayers. To provide a means of 
helping to support states and local units, the bill provides for 
payments by the CVA "in lieu" of taxes. But what would be paid 
is carefully left to the exclusive determination of the CVA. Thus 
is provided almost plenary power over state and local government 
through financial control. And since private utilities would ulti- 
mately be absorbed, this great source of taxation would vanish. 

In connection with its extensive activities, the CVA could move 
and rearrange highways, bridges and other properties of govern- 
ment without restraint. 

Since vast substantive power is taken from the states and their 
subdivisions, the CVA plan makes several gestures toward advisory 
methods. These various advisory committees would have just as 
much value as the CVA would determine. Moreover, a subtle 
danger is here involved. Under the guise of "advice," the CVA 

[56] 



could enlist an indeterminate number of people in advisory capac- 
ities, paying traveling expenses and a "per diem" to what could be 
a great army of semi-subsidized citizens. This evil exists now in 
payments by the Federal government to lawyers and others for 
what may really amount to the purchase of good will or propa- 
ganda. Thus, the "advisory" proposal is worse than nothing. 

Finally, it should be noted that CVA powers would be based 
upon two indisputable Federal powers— national defense and the 
commerce clause. These powers are plenary and are unlimited to 
the extent necessary to carry out the purposes of legislation based 
on them. Hence, the CVA would claim unlimited implied and 
accessory powers. The state courts would be helpless to prevent 
this and the CVA would move cases to the Federal courts. The 
states would in substance retain what the CVA would want to 
give them— no more. 

The 1945 Overton Report on an MVA sums up its opinion on 
this point: 

"Local autonomy is not assured ... it would mean the creation of 
a super state . . . would challenge state sovereignty and destroy 
systems of laws, both State and Federal, under which western 
agriculture has grown and prospered." Senator O'Mahoney adds: 
"It would be, in my judgment, a repudiation of the Constitution of 
the State of Wyoming and the Act of Admission to pass this bill." 



REVISION OF ESTABLISHED WATER LAW 

There are two systems of water law, the riparian (usually found 
in the East), where an owner of land contiguous to a stream can 
use the water for irrigation if this use is reasonable in relation to 
others riparian to the stream also; and the appropriation (usually 
found in the West ) , where the amount to be appropriated is deter- 
mined. Unfortunately, in some of the states of the West and 
Midwest, both types of water law are found. As a result, court 
decisions have set up a system that cannot be changed overnight. 



[57] 



In an effort to settle this problem, numerous laws have been 
passed. These are not inconsistent and together have established a 
sound policy. The Reclamation Act of 1902 established the doctrine 
of "beneficial use" as a measure of the right to irrigation water. It 
also recognized states' rights in that this law could not interfere with 
the laws of any state or territory. The Flood Control Act of 1944 
again recognized the states' rights, and the prior right to water for 
beneficial use over navigation. 

Despite these laws, the trend in recent court decisions has been 
toward Federal control as against states' rights. This trend would 
be carried much further under any of these bills. All current inter- 
state compacts, state constitutions and court decisions would be 
ignored. According to the CVA bill: 

"the doctrine of beneficial consumptive use of water shall be 
recognized, and in the event of any conflict between the purposes 
for which the waters of the region may be used, preference shall 
be given to atomic energy requirements for national defense and 
to domestic, irrigation, mining, and industrial purposes." 

Despite these words, those who favor a CVA claim that it will 
not change existing water laws. In a later section of the bill, they 
state that they will follow existing laws on water use, but also state 
that they cannot be prevented from acquiring property. Evidently, 
if the water users do not conform to CVA rules, they will have to 
give up their property. 

The Overton Committee says with reference to an MVA: 

"State water laws . . . should not be, directly or indirectly, jeopar- 
dized in the manner proposed by this bill." 



A REVOLUTION IN LAND OWNERSHIP 

In dividing up the public domain, farms of 160 acres will be set up 
by these plans. Most of the public domain is in the Midwest and 
West, where small farms have never been economically feasible. 



[58] 



The Department of Agriculture said in Farmers in a Changing 
World: 

"In many cases holdings are too small for economical operation 
under the type of farming required. This is especially serious in 
Western Great Plains. The ill-advised application of homestead 
policies to this territory divided the land into small units of 320 to 
640 acres, where operating units of several sections are requisite." 

In the Columbia Valley, farms average 599 acres, and in the 
Missouri Valley, 628 acres. 

Dean William I. Myers of the New York State College of Agri- 
culture at Cornell University, says : 

"These figures represent the averages of very unlike types of 
farms. In both cases the so-called farms include a few very large 
ranches of several thousand acres each, a substantial number of 
dry land grain farms of several sections each, and an unknown 
number of irrigated farms with smaller acreages of intensive crops. 
The averages cited above do not give a true picture of any one of 
these types of farming, but they do show that the agriculture of 
the region has become adjusted to the semi-arid climate by the use 
of larger acreages where necessary to provide an efficient unit and 
a decent living. Any legal limit of 160 acres, even in an irrigated 
farm, is in direct conflict with economic trends. The average size 
of both irrigated farms and semi-arid grain farms is increasing as 
the farm family is able to operate a larger acreage with modern 
machinery. While fewer acres are necessary with intensive irri- 
gated crops, the markets for these products are limited and the 
acreage necessary for an economic unit depends on the type of 
product." 

THE DESTRUCTION OF PRIVATE ENTERPRISE 

The most obvious and immediate victim of concentrated govern- 
ment power vested in a public corporation under the terms of the 
CVA and MVA bills would be privately owned electrical utilities. 
In both bills the authorities would have broad power to take over 
companies by voluntary sale and purchase. In the MVA bill there 
are spelled out detailed powers of condemnation. Under both 

[59} 



plans, methods would be at hand which would render competition 
by private companies almost impossible. It is further provided in 
both bills that after the acquisition of private properties, prefer- 
ence shall be given in any re-sale to publicly owned utilities and 
cooperatives. 

Moreover, by the terms of both bills, electric power would be 
sold under preferential contracts to public agencies and to "co- 
operatives" and other organizations not organized or administered 
"for profit." 

This would, of course, extend the power of the authority in every 
phase of economic life with the expressed purpose of laying a heavy 
handicap upon private enterprise for profit. It could, as I have 
already noted, set up businesses of its own as "demonstrations." 

The key to economic life in most sections is electricity and, under 
authorities, that key would be held by an agency committed 
against private enterprise. 



DISTORTION OF FINANCIAL ACCOUNTING 

Allocation of costs goes to the heart of all the financial account- 
ing of these authorities. I have already described the effect of this 
dubiously administered power in TVA. The same power would 
exist in a CVA and an MVA. The proposed bills carefully place this 
power in the authority, with little or no chance for review or 
revision. 

It hardly needs repetition that when large allocations of costs 
of multi-purpose projects are given to non-reimbursable items like 
flood control and navigation, the Federal government will foot the 
bill for irrigation and electric power at something below real cost. 

In the CVA, the directors would make the allocations. They 
would "submit" these allocations to the President within three 
years and within five years to Congress. There is no provision for 
review by Congress. 

[60] 



The MVA bill provides that allocations shall be filed with Con- 
gress within three years. There is no provision for review by 
Congress and, if such allocations shall not be disapproved by the 
President, they shall be final. The MVA bill goes further in permit- 
ting allocations to be used to subsidize water and electricity at 
Federal expense. It says: 

"costs of facilities having a joint value for more than one purpose 
shall be equitably allocated among such purposes in such manner 
as the board deems necessary or appropriate to encourage the 
widest possible economic use of water for irrigation and of electric 
energy for domestic rural and industrial needs." 

Why this frank statement of an intention to do exactly what the 
TVA has been accused of doing should be impaired by the hypo- 
critical word "equitably" is difficult to see. For if there is to be 
any equity, the users should pay at least a fair cost. 

In both the CVA and the MVA bills, there are provisions con- 
cerning the methods by which funds are to be managed. It is 
required that funds which the authority receives from the Treasury 
under Congressional appropriations which are used for reimburs- 
able projects shall be repaid. The terms of repayment and for 
interest are extremely vague, however. In both cases, the authori- 
ties will have plenty of money derived from the sale of electric 
power and water, which, subject to very loose conditions, they may 
use for a variety of purposes. Under the MVA bill, the authority 
could make loans to states, counties, municipalities, and "non-profit 
organizations." Such loose money used for all sorts of purposes, 
including lending, would apparently not be subject to Congres- 
sional appropriations. It is conceivable that with the sort of gigantic 
operations that would eventually grow, enormous sums could be 
spent with no specific Congressional appropriations. The authority 
might also make contracts with land owners for improving their 
lands and for the building of "farmstead buildings and improve- 
ments." Costs shall be reimbursable "with or without interest." 

One of the provisions of the MVA bill relieves the authority from 
the control generally exercised by the Comptroller General. An 

[61] 



identical provision in the 1945 bill drew the bitter criticism of the 
Overton Committee, but it is carried over in the later version. 



EMPLOYMENT PRACTICES 

Both the cva and mva plans exempt employees from the United 
States Civil Service laws. Removal would be at the discretion of the 
directors. 

The directors in both proposed authorities would be permitted 
but not compelled to bargain collectively. 

The CVA is authorized to enter into "written or oral" contracts 
with representatives of employees. It should be noted that under 
the Wagner Act it is declared to be evidence of bad faith for 
employers to refuse a written contract. But the CVA could refuse. 

GREAT COSTS 

We have seen a billion dollars go into the TVA with returns that at 
least in part are in the realm of non-material values. There is no 
way of estimating with any degree of accuracy the possible costs 
of CVA, MVA and of other VA's yet to come. The advocates remind 
us, of course, that since they would absorb existing spending 
agencies, they will not cost more. The CVA program, however, was 
estimated by the Bureau of Reclamation at $6.6 billion and the 
MVA was estimated by the Hoover Commission Task Force on 
Natural Resources at $6.5 billion. It has been reliably estimated 
that all currently contemplated multi-purpose projects would cost 
$40 billion. Thus, on an estimated completion date of 1970, expen- 
ditures would range from $1 billion to $4 billion annually, or an 
average of $1.7 billion. 

Whether these expenditures are to be allowed depends upon 
Congress, regardless of whether more valley authorities are 
authorized. 

[62] 



It is quite certain, however, that whether more or less is spent 
under valley authorities on projects, there would be much more 
spent on personnel. For no one versed in the ways of bureaucracy 
expects the top overhead of existing Federal departments to be 
reduced if valley authorities take over a part of their work. There 
will still be secretaries, under-secretaries, assistant secretaries and 
bureau chiefs, with all the personnel that go with those offices. 

Meanwhile, a big overhead would be built up in the valleys. This 
new official family would have to be staffed, housed, and provided 
with travel expenditures. And there would, of course, be new pub- 
licity and propaganda agencies to carry the gospel. That these 
authorities would impose several new layers of taxes upon the 
nation is hardly debatable. 



THE NARCOTIC OF PATERNALISM 

It is hard to escape the conclusion that these authorities would, 
among other activities, be engaged in a vast adventure in patern- 
alism. As I have shown, electric power could be sold, land irrigated, 
houses and improvements built, and many other benefits bestowed 
at less than cost. Taxpayers or other consumers would pay for these 
gifts. Selected people of the region— countless thousands of them— 
would live on bounty subsidized by a great government agency. 
Under such a dispensation, there would be changed not only the 
form of our economy and government, but the character of the 
people as well. The long-term effect of subsidies which are not based 
upon proven need is narcotic for those who receive and unjust to 
those who provide. Surely the people of these regions cannot want 
something for nothing now. But there is no doubt about their 
acquiescence when the habit is established. 

What would happen when, as proponents suggest, the whole 
nation will be composed of favored subsidized regions? 

An experiment like the TVA can enrich some of the people at the 
expense of all of the people without perceptible effects upon the 

(63} 



general economy. And those benefited can offer a shining example 
of well being. We can subsidize some of the people all of the time 
and all of the people some of the time. But we cannot subsidize all 
of the people all of the time. 



PROPAGANDA AT PUBLIC EXPENSE 

Propaganda is the inevitable by-product of bureaucracy. The cam- 
paign for new valley authorities and the ardent exploitation of TVA 
are some suggestions of things to come. Aside from the employment 
of well-staffed publicity agencies, a considerable part of the time of 
top officials is devoted to itinerant evangelism from coast to coast. 

In this propaganda a plentiful use of the allegation of bad motives 
has been indulged in. Opponents are smeared as advocates of a 
mythical "power trust." Citizen activities in opposition have been 
charged with using money contributed by private and interested 
sources. The use of any money in this debate except taxpayers' 
money seems to be adjudged wrong. There is a presumption that 
only government employees enter the debate with clean hands. 

Government officials in their activities are in effect telling the 
people of the Northwest and elsewhere— for the speaking activities 
of official proponents have extended as far as New England— to put 
pressure on their Congressmen to enact the CVA measure. Included 
in the flood of propaganda there have been many inferences and 
statements that are clearly misleading, such as the assertion that 
the Hoover Commission favored this plan. 

The new authorities would swell the chorus. The forums of the 
regions themselves would be well supplied with speakers. The 
press would be inundated with releases. The authorities themselves 
would from the beginning be "news." All sorts of legal and technical 
advisers and counsellors would be employed on a retaining or part- 
time basis. In short, the areas would be saturated with propaganda 
for which the public would pay. 

No real critical counter-effort would be possible, partly because 
it would be costly, partly because it would invite economic retal- 

[64] 



iation and largely because after autocracy becomes an accomp- 
lished fact, fatalistic acquiescence sets in. 



DANGERS TO ALL LIBERTIES 

As the channels of opinion fill with government-inspired propa- 
ganda, the realities of free discussion are steadily lost. The economic 
power of authorities over state and local government which I have 
described would have their effect upon the press, the schools, 
civic bodies and every other agency of citizens' expression and 
enlightenment. 

Political liberty, too, would suffer. A burgeoning army of govern- 
ment employees would heavily weight party organizations and 
sway elections. 

These insidious invasions of liberties would be progressive in 
the contemplated growth of the economic power of such authori- 
ties. Ultimately, one property owner, the authority, would rise 
above all others. 

The concept of widely distributed wealth and liberty would end 
in public monopoly. 



[65] 



VII 

COORDINATION WITHOUT AUTOCRACY 

STATE PRESERVATION AND PARTICIPATION 

It is no overstatement to suggest at the outset that no value even 
hinted at by the most ardent advocates of valley authorities is more 
important than the preservation of the integrity of our states. They 
are essential to the republic as we have had it, to constitutional gov- 
ernment, and to every personal liberty. To threaten them is to 
threaten republican government. And this concept does threaten 
the reality of their influence and integrity. They must not be rele- 
gated to mere administrative districts or geographical areas. 

Further, as we have seen in the preceding section of this study, 
there are manifold regions having many more bases than river 
valleys. When these are all considered, their infinite variety and 
their over-lapping boundaries, the states emerge as essentially nec- 
essary units of government. 

It should be added here that our American states are valid units 
for many more reasons than those of convenient administration or 
political organization. They are cultural centers. Our educational 
system, wisely conceived by Jefferson, is based on state autonomy, 
with a hierarchy of schools leading up to great state universities. 
The vitals of local government are preserved by state law. In fact, 
state law still governs the great majority of our human concerns. 

[66} 



There is the invisible but powerful reality of human loyalty to and 
pride in the states of our birth and residence. 

All these considerations demand major state participation in the 
management and development of our economic and social re- 
sources. To relegate the states to an advisory function in such 
immense interests would indeed transform our civilization. And 
states can participate, as we shall see, in these activities in practical 
ways. 



HOOVER TASK FORCE SPECIFICATIONS 

The hoover task force on National Resources sets forth the fol- 
lowing general specifications, with which it would seem any reas- 
onable person should agree : 

"a. Some agency must be granted fairly broad responsibility to 
integrate at least the major Federal water development functions 
in given river basins. The scope of its functions need not be as 
broad as that of TVA, but it must be broad enough to enable the 
agency to formulate a program of water use and control, taking 
into consideration the purposes of navigation, flood control, irriga- 
tion, power development, pollution control, recreation, domestic 
and industrial water consumption, etc.* 

"b. The jurisdiction of the agency with full responsibility for 
water resource development in a river basin must be coextensive 
with the boundaries of that basin. It makes no sense to divide re- 
sponsibility between two water development agencies operating 
in the same basin. 

"c. The agency with responsibility for water resource develop- 
ment within a river basin must make provision for adequate de- 
centralization so that basic resource decisions will be made in the 
light of conditions in the areas they affect. The advantages of 
'grass roots' administration should be preserved. 



"*In view of the fact that the consumptive use of water resources of the 
West is governed by water rights established by State law and by inter- 
state and international compacts, any Federal action should be in com- 
pliance with local, State, and interstate rights and interests." 

[67] 



"d. Similarly, if other bureaus and departments with related 
functions are to share in this development they will need to modify 
their programs to make possible more effective coordination than 
is now possible. This means a greater degree of decentralization 
along river basin lines; greater uniformity in regional and field 
office headquarters; more even delegations of authority; and a 
policy of adapting national departmental programs to the pace of 
regional water resource development. 

"e. Adoption of a mechanism for inter-agency review and co- 
ordination on a national and regional scale, with strong presidential 
support. 

"f . Adoption of uniform legislative and administrative standards 
for estimating costs and benefits, determining over-all economic 
and engineering feasibility, requiring repayment of costs, making 
authorization and appropriations for multiple-purpose projects 
and the several features thereof." 



HOOVER TASK FORCE RECOMMENDATIONS 

Ex-governor miller's task force recommends a consolidated 
water development service in the Interior Department. This was 
adopted by the Commission. The Task Force report recommends 
the retention of the TVA in its present form. But it opposes the 
creation of any more valley authorities. 

It would set up however, presumably under the Department 
of the Interior, decentralized regional forms of administration to 
offer means of facilitating local participation in planning and inter- 
service cooperation. It also recommends state participation and 
responsibility in cooperative development of water resource 
projects. 

It makes clear in its report that there should be "full recognition 
of the rights of individuals, groups, and states." It also makes clear 
that water rights are governed by state laws as well as by interstate 
and international compacts. It points out that Federal agencies 
should act in compliance with local, state and interstate rights 
and interests and this would involve participation by state agencies. 



[68] 



HOOVER COMMISSION RECOMMENDATIONS 

When the hoover commission came to the controversial issues 
involved in river and land development on a regional basis, sharp 
ideological differences arose. Four of the twelve members disagreed 
with the solution recommended by the majority. Three of these 
submitted a minority report recommending a new Department of 
Natural Resources, in which in a rather vague way the virtues of 
both vertical and regional administration would be combined. Two 
other members objected to the merger of the civil activities of the 
Army Engineers with the Department of the Interior. Presumably, 
these two did not favor the extension of the valley authority idea. 
The Commission majority recommended a thorough reorganiza- 
tion of the Interior Department. It proposed to turn over the Bureau 
of Land Management to the Department of Agriculture. Then it 
recommended that the rivers and harbors and flood control activi- 
ties of the Army Engineers be transferred to the Department of 
the Interior. 

It recommended that all water development and use be consoli- 
dated in a single service of the Department. This unit of the De- 
partment would have responsibility for reclamation, rivers and 
harbors development, flood control, the Bonneville Power Admin- 
istration, the Southwestern Power Administration and the Division 
of Power. The status of the TVA under the new regime is not stated. 
To provide local participation in organization and planning on 
"a drainage basin basis," it recommended that: 

"a Drainage Area Advisory Commission be created for each major 
drainage area, comprising representatives of the proposed Water 
Development and Use Service of the Department of the Interior, 
the proposed Agricultural Resources Conservation Service in the 
Department of Agriculture, and that each State concerned should 
be asked to appoint a representative. The purpose of these 
Drainage Boards should be coordinating and advisory, not 
administrative." 
The general principles underlying these recommendations would 
seem to be these: 

[69} 



That planning and construction of water and hydro-electric 
projects should be directed from the Interior Department, not by a 
regional authority; that the conventional Congressional controls 
should remain; that to the fullest extent local advisory participa- 
tion should be used in the regions. 

There is no mention of the TVA in the majority report of the 
Hoover Commission. 

In considering the majority recommendation, it should be re- 
membered that the Hoover Commission was limited to "the organ- 
ization of the Executive Branch of the Federal Government." It 
could not deal with broad policy having to do with the extent of 
developments, the question of the extent to which public projects 
should serve the public through irrigation or electric power devel- 
opment, or many of the other issues raised in the foregoing pages. 
Those broader issues are legislative and political. 

SURVEY BY 
COUNCIL OF STATE GOVERNMENTS 

The council of state governments, upon the urging of the Mis- 
souri River States Committee, has agreed to make a study of the 
various alternative approaches to the problem of water resource 
planning, development and management. This study is under way 
and will presumably submit its findings at the 1951 Governors' 
Conference. 

THE WATKINS WATER AND POWER USERS' 
ASSOCIATION CONCEPT 

Senator Arthur v. watkins of Utah has introduced a bill which 
would solve the problem of Federal-state relations in water and 
land conservation and development by creating "water and power 
users' associations." These associations would contract with the 
Federal government to plan and build projects. Operation, main- 
tenance, sale of power and water would be vested in the associa- 

[70] 



tions. A state or several states by compact could join in these 
associations. Title to the projects would be vested in the associa- 
tions. The Federal government, during the period in which the 
project has not been paid for, should have a representative on the 
board of directors of the association. Shareholders should be water 
and electric power users. Such associations might be small or large. 
Some would be limited to a single project; some, presumably, might 
be interstate and include in their operations several projects. 

PROPOSED COLUMBIA RIVER COMPACT 

The governors of the states affected by CVA in the course of 
their resistance to the valley authority solution of interstate prob- 
lems, have turned more and more to the compact idea. Governor 
Langlie has drafted a proposed Columbia River Compact, which 
would involve the states of Washington, Oregon, Idaho, Montana, 
and Wyoming. The Federal government would be invited to par- 
ticipate in the formation of the new body. 

Upon agreement by the respective states through their legisla- 
tures, and by Congress, a body would be created to be known as 
"The Columbia River Compact Commission." This would be the 
administrative body to carry out the purposes of the compact. 

Those purposes, in Governor Langlie's draft, would be: 

"to provide for the most efficient use of the waters of the Columbia 
River for multiple purposes; to provide for an equitable division 
of such waters and of the benefits thereof; to remove causes of 
present and future controversies; to promote interstate comity; to 
promote cooperative action between the states and the United 
States in the fuller utilization of such waters for the maintenance 
and development of the natural resources of the states involved." 

AN INTERSTATE-FEDERAL COMPACT PLAN 

Essential Requirements 

In putting together the elements of a practical alternative to the 
Federally created valley authority, it may be well at the outset to 
outline the essential requirements of such a solution. These 
should be: 

[71] 



1. Scope for broad long-term planning of the many factors in the 
development of interstate river basins; 

2. Scope for development by non-governmental means through 
the voluntary investment of private capital; 

3. Scope for Federal aid and constructive activity in developing 
resources in which for the most part the states have paramount 
rights but in which there are also material Federal rights; 

4. Active participation by the states concerned not only in help- 
ing to pay for such developments, but in their continuing 
management; 

5. Protection of the integrity and rights of state and local self- 
government; 

6. Clear determination of the ownership of Federally built im- 
provements; 

7. The safeguarding of individual freedoms, including the right 
of private property; 

8. Clear responsibility of and to Congress in all Federal expendi- 
tures and to the states for state expenditures; 

9. Sound and fair financial methods in the administration of such 
extensive property accumulations, notably in allocating the 
costs of multiple-purpose projects; 

10. Adequate recognition of existing plans and projects, many of 
which are the result of long negotiation, compromise and prac- 
tical experience. 

Essential Elements of Policy 

In situations where public development of an interstate project 
is to be undertaken the following constructive steps would be es- 
sential in meeting these requirements: 

1. Corporate authorities should be created through interstate com- 
pacts, in which the Federal government would be joined as one 
of the parties to the contract. Such agencies might in some cases 

[72] 



be based upon whole river basins and some upon portions of 
those basins. In some cases the contractual relationship might 
be between a single state and the Federal government. There is 
no valid reason why all such agencies should be inclusive of all 
of a single basin. 

2. The first undertaking of such agencies should be broad planning 
in which the expert services of the Federal government, the 
states and appropriate private agencies and corporations should 
participate. For such plans should contemplate a free civiliza- 
tion, not a socialist state. 

3. Not only in planning but in construction the Federal government 
should have an important part. The Hoover Commission's rec- 
ommendation that the Interior Department have this responsi- 
bility is sound. Also sound is its recommendation that the major 
functions should be concentrated in a Water Development and 
Use Service in the Department. 

4. The construction of the projects should be done by the Interior 
Department under authorization and appropriation by Con- 
gress, with generous contributions by the states and private 
corporations. 

5. There is no reason why a state-Federal administration, properly 
incorporated should not raise all or a large part of the money for 
the reimbursable purposes of multiple-purpose projects by bond 
issues. At the 1950 Governors' Conference, Governor Driscoll 
of New Jersey forcibly urged this upon his fellow executives. If 
these matters really will pay for themselves, as their exponents 
assert, the bond market is the place for the test. Governor Dris- 
coll suggested that, considering all the factors, including inter- 
est rates and the inflationary effect of deficit spending on the 
economy, it might be much cheaper to pay for these projects by 
selling the securities to the public. Such a method, moreover, 
would measurably check the habit, so common to states and 
regions, of looking to Washington for all the money for water 
improvements. 

[73] 



7. One of the major issues that needs final determination is whether 
dams and other great projects now built or being built belong to 
the Federal government or to the states where they are located. 
The land and the water which they are built to improve do 
belong to the states. 

A proper policy should be based on the proposition that in 
paying for such projects the Federal government is loaning engi- 
neering skill and money for the reimbursable projects and for 
those parts of multiple-purpose projects which are reimbursable. 
It pays all the costs of flood control and navigation. For what is 
loaned there should be repayment with interest. The states, with 
Federal government as a partner, through a compact should 
create the corporate body to hold these improvements as owner, 
to administer them, and to provide for their payment. 

8. The interstate-Federal compact creating such agencies should 
provide an impartial means of allocating costs. Perhaps this 
might be done by a group, some members of which should be 
appointees of the President and an equal number appointed by 
the governors or, if legally possible, by the Supreme Courts of 
the states. 

9. Such an agency should be clearly responsible to the Congress 
and to the legislatures of the states for financial accounting and 
for appropriations. 

10. It should be a basic objective that in the economic activities of 
such a coordinated agency there should be no settled policy of 
preference for public versus private electric power production 
and distribution or water distribution. Private investment and 
operation under Federal and/or state regulation should be as- 
sured by declared permanent policy. 

11. Tax policies should be worked out in such compacts by which 
fair allocations of contributions by states can be made. This 
should certainly include the return to the states by Congress of 
tax sources now arbitrarily held by the Federal government. 

[74] 



Moreover, in matters in which competition exists between pub- 
lic and private activities, the former should bear a fair share. 

It is noteworthy that most of the informed people who have 
sought a way to achieve the desirable purpose of a broad and coor- 
dinated water development of the great river valleys without the 
objectionable features of autocratic socialistic authorities have sug- 
gested as a solution some application of the interstate compact idea 
authorized under the Constitution. It is equally noteworthy that 
the ardent advocates of progressive expansion of public power 
under autocratic Federal administration have argued with reckless, 
passionate abandon against this solution. 

It deserves to be said that prior to the creation of the TVA there 
had been plenty of constructive action and planning for broad 
water use, including hydro-electric projects. Herbert Hoover in a 
speech before the Columbia River Basin League in Seattle in 1926, 
outlined a plan which included interstate-Federal development, 
notably the Boulder Canyon project which became a reality two 
years later. In all these years, the first of which preceded by a 
decade the initiation of the TVA, this engineer who became Presi- 
dent constantly advocated broad policies of development of water, 
land, and mineral resources. His views have stood the test of time, 
although the vicissitudes of politics and the infusion of new and 
dubious ideologies have misrepresented his wisdom to the public. 
They embody practically all of the final suggestions made above- 
coordinated planning of interstate areas, Federal construction, 
local and state participation, acceptance of the role of private 
initiative in providing funds for construction and operation, and 
financial policies that would provide a proper return from the de- 
velopment toward reimbursement to the whole country for what 
is spent for a part of the country. 

The Constitution under Section 10 of Article I says, "no State 
shall, without the consent of Congress . . . enter into any Agreement 
or Compact with another State, or with a foreign Power." While 
this is expressed in the form of a qualified prohibition, it is in reality 

[75] 



the authorization of such agreements. Practically every Federal 
government in the world by direct constitutional authority or by 
implication, permits compacts among its constituent states, and 
such agreements are in fact common. 

The idea represents the great possibilities of a flexible Federal- 
ism through the use of the compact as an instrument of government. 

In the broad sense of the word, the very foundations of the 
republic rest upon an interstate compact, for that is what the mak- 
ing and adoption of the Constitution itself really amounted to. 

The compact idea has been successfully applied in many cases 
of interstate and Federal interests. Perhaps the most brilliantly 
successful has been the Port of New York Authority. It is an inter- 
esting case in semantics that President Roosevelt used the word 
"authority" in the TVA plan because he was so familiar with the 
New York-New Jersey port plan. In so doing, however, he ignored 
the very nature of the Port Authority and applied the term to an 
entirely different concept. 

The Council of State Governments through many regional activ- 
ities is proving the necessity and validity of groups of states with 
common problems working out plans, projects and common legis- 
lative and administrative problems in concert. 

There is no valid reason why the compact idea should be aban- 
doned. It has worked, is working and can be successfully developed 
by further experience. 



[76] 



PUBLICATIONS 



National Economic Problems Series 



no. 437 — Farm Price and Income 
Supports, 0. B. Jesness — 1950 
NO. 436 — How Much Social Secur- 
ity Can We Afford? Leonard J. 
Calhoun — 1950 

NO. 435 — The Changing Forest Sit- 
uation: A Study of Conservation 
on State and Private Forest Lands, 
Frank Sweeney — 1950 
NO. 434 — Where Does Statism Be- 
gin? A Study of Pending Propos- 
als to Expand Government Con- 
trol of the Economy, Joseph H. 
Ball— 1950 

NO. 433 — Monetary Policy and 
Economic Prosperity: Testimony 
of Dr. W. W. Stewart (July 3-4, 
1930) before the Macmillan Com- 
mittee. With introduction by Don- 
ald B. Woodward— 1950 
NO. 432 — Corporate Profits in Per- 
spective, John Lintner — 1949 
NO. 431 — Expanding Welfare in a 
Free Economy: A Commentary on 
the Ewing Report and Other Re- 
cent Government Publications, 
Edna Lonigan — 1949 
NO. 430 — Current Problems of Im- 
migration Policy, E. P. Hutchinson 
—1949 

*NO. 429 — The European Economic 
Situation — 1948, Frank Sweeney 
—1948 

NO. 428 — Guaranteed Employment 
and Wage Plans : A Summary and 
Critique of the Latimer Report 
and Related Documents, William 
A. Berridge and Cedric Wolfe — 
1948 

NO. 427 — Should Fertilizer Pro- 
duction Be Subsidized? An Analy- 
sis of the National Soil Fertility 
Act of 1947, Richard Bradfield — 
1947 



NO. 426 — The Foreign Loan Policy 
of the United States, J. B. Cond- 
liffe— 1947 

NO. 425 — Industry - Wide Collec- 
tive Bargaining and the Public 
Interest, John V. Van Sickle — 1947 

NO. 424 — Farm Income and Prices : 
A Re-examination of National 
Policy, L. J. Norton— 1947 

NO. 423 — Proposals for Considera- 
tion by an International Confer- 
ence on Trade and Employment, 
J. B. Condliffe— 1946 

NO. 422— The Market for Risk 
Capital, Jules I. Bogen — 1946 

NO. 421— The Food Situation, F. A. 
Harper — 1946 

N o. 420— The United States Patent 
System, Laurence I. Wood — 1946 

NO. 419 — Should State Unemploy- 
ment Insurance Be Federalized? 
Herman Gray — 1946 

NO. 418A— The National Health 
Program Scheme: An Analysis of 
the Wagner-Murray Health Bill, 
Earl E. Muntz— 19 46 

NO. 418 — Proposals For Health, 
Old-Age and Unemployment In- 
surance: A Comparison of the 
1943 and 1945 Wagner - Murray 
Bills, Earl E. Muntz— 1946 

NO. 417 — Labor Adjustment Ma- 
chinery, Herbert R. Northrup — 
1946 

NO. 416— The Charter of the Unit- 
ed Nations: An Analysis, Felix 
Morley— 1946 

NO. 415 — The Full Employment 

Bill: An Analysis, Henry Hazlitt 

—1945 

NO. 412 — Postwar Public Relief 

Policies, Edna Lonigan — 1945 



*Out of Print 



[77] 



NO. 411 — American Trade Policy 
and Position, Herbert Feis — 1945 

NO. 410 — Wheat Under Interna- 
tional Agreement, Joseph S. Davis 
—1945 

*NO. 407 — International Monetary 
Reconstruction: The Bretton 
Woods Agreements, Michael A. 
Heilperin — 1945 



*NO. 405 — Railroad Social Insur- 
ance: Favored Treatment versus 
Uniform Social Insurance, Rai- 
nard B. Robbins — 1945 

NO. 404 — International Cartels in 
the Postwar World, J. Anton de 
Haas— 1944 

NO. 401 — Social Security: An 
Analysis of the Wagner-Murray 
Bill, Earl E. Muntz—19U 



Economic Survey Series 



NO. 414 — Regional Freight Rates, 
J. H. Carmical — 1945 

no. 413 — Regulation of Prices in 
the Reconversion Period, Jules 
Backman — 1945 

NO. 409— Wealth of (Two) Na- 
tions, A Staff Report — 1945 

*NO. 408 — The Anglo-American Pe- 
troleum Pact, J. H. Carmical — 
1945 



*NO. 406 — The Chicago Aviation 
Agreements, Don Cook — 1945 

*NO. 403 — State Trade Barriers and 
Multiple Taxation, A Staff Report 
—1944 

*NO. 402 — Disposal of Government- 
Owned Industrial War Properties, 
A Staff Report— 1944 



Basic Commodities Series 



*no. 1— Effect of Purchasing Coal 
For Shipment Abroad, Robert 
S chafer— 1948 

NO. 2 — Effect of Purchasing Lum- 
ber For Shipment Abroad, Frank 
Sweeney — 1948 

NO. 3 — Effect of Purchasing 
Freight Cars For Shipment 
Abroad, Marjory Ericsson — 1948 

NO. 4— The Effect of Buying 
Wheat For Shipment Abroad, 
Robert Schafer—194% 



NO. 5 — Effect of Purchasing Steel 
For Shipment Abroad, Robert 
Schafer— 1948 

NO. 6 — Effect of Purchasing Petro- 
leum For Shipment Abroad, Frank 
Sweeney — 1948 

NO. 7 — Effect of Purchasing Fer- 
tilizer For Shipment Abroad, Ken- 
neth P. Sheldon— 1948 

NO. 8 — Effect of Purchasing Farm 
Machinery For Shipment Abroad, 
Kenneth P. Sheldon — 1948 



*Out of Print 



Each Study, 50 Cents 
Special Prices Will Be Quoted On Quantities 



[78} 





Date Due 






19&EM "f 






/ 






































































































































85 









V 



Valley authorities, main 
338.973M719vC2 



Mill AT 

C.St 



3 12b2 03215 flESM 



AMERICAN ENTERPRISE ASSOCIATION, Inc. 

4 East 41st Street • New York 17, N. Y. 



ADVISORY BOARD 

Charles C. Abbott, Chairman 

Professor of Business Economics, Harvard University 

Graduate School of Business Administration 



Henry Hazlitt 

Business Columnist 

Newsweek 

R. A. Hohaus 

Actuary, Metropolitan 

Life Insurance Company 



James E. McCarthy 

Dean, School of Commerce 

Notre Dame University 

William I. Myers 
Dean, New York State 
College of Agriculture 

Cornell University 



Roscoe Pound 
Professor Emeritus 
Harvard University 

Edgar W. Smith 

General Motors Overseas 

Operations 



John V. Van Sickle 

Professor of Economics 

Wabash College 



Leo Wolman 

Professor of Economics 

Columbia University 



OFFICERS 

Chairman 
Lewis H. Brown 

Vice-Presidents 
C. J. Abbott John J. Hopkins 

Robert L. Lund Fred A. Poor 

Treasurer 
N. Baxter Jackson 



C. J. Abbott 
Henry P. Bristol 
Lewis H. Brown 
Paul S. Clapp 
Carl P. Dennett 
Raoul E. Desvernine 
Thomas Drever 
Alfred C. Fuller 
W. Harnischfeger 



TRUSTEES 

Richard Harte 
Charles R. Hook 
John J. Hopkins 
B. E. Hutchinson 
N. Baxter Jackson 
Oswald W. Knauth 
Edward H. Little 
Robert L. Lund 
Hughston M. McBain 



Walter S. McLucas 

H. S. MlDDENDORF 

Nicholas H. No yes 
Fred A. Poor 
Louis Ruthenburg 
Henry D. Sharpe 
Wilfred Sykes 
SiNCLAm Weeks 
Ernest T. Week 
Charles M. White 



Executive Vice-President 
Paul H. Perreten